Thanks jairam,Yes i have corrected the values.I would think $1 is the transaction costs such that it completely erodes any riskless profit that we try to make.. That's a great example you posted there.. Didn't understand why 48,52,52 and 48 were used for payoff formula . When it should be 45,55,55 and 45.. Why 3$ difference? But the payoff calculations for different stock price ranges are correct..