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Calculate profits of a call option

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Suppose you buy one SPX call option with a strike of 1400 and write one SPX put option with a strike of 1400. What are the payoffs at maturity to this position for S& P 500 Index levels of 1300, 1350, 1400, 1450, and 1500?

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This solution contains step-by-step calculations and instructions to determine the profits of a call option.

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Buying a call at 1400 means that you can, at maturity, buy one SPX at 1400.

Write a put at 1400 means that at maturity, you may sell one SPX at 1400.

If S&P hits 1300 at the end of your ...

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