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Becuase excessive (arbitrary) profit can be made if market prices of the Put/Call are fair.

Am I right ?

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I think the payoff of the box spread = Xh-Xl.
RFR is a return.

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deriv108 Wrote:
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> I think the payoff of the box spread = Xh-Xl.
> RFR is a return.


It will be Xh - Xl - Net premium paid

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