a) Derive the profit profile for a spread trade with equal position sizes. What factors determine
the profitability of this trade? Derive the profit profile for a tailed spread and explain how this trade
is different from one with one-to-one position sizes. Does your answer depend on the commodity
under consideration?
b) What factors determine the profitability of: a butterfly in corn; a tandem in gasoline and heating
oil; and, a metal stereo with copper and gold. (Hint: Use the profit profile for the trades to identify
the factors.).