# Arbitrage strategy one-period model

Consider a one-period model with a stock $$S_0=1$$ and $$S_1>0$$. Introduce call options with strikes $$K_1 maturing at $$T=1$$. Assume further that $$C(K_2)>\frac12(C(K_1)+C(K_3))$$ and $$K_2=\frac12(K_1+K_3)$$. Here, $$C(K_i)$$ is the initial price of the call option with strike $$K_i$$. I want to find an explicit arbitrage strategy.

• What have you tried to find an arbitrage? – Bob Jansen Jun 3 at 10:25
• Have a look of this question. – Gordon Jun 3 at 13:10