In: Finance
Nine-month put options with strike prices of $55 and $60 cost $4 and $7, respectively. What is the maximum gain when a bear spread is created by trading a total of 200 options?
Select one:
a. $100
b. $200
c. $300
d. $400
Cost from put option = (7-4)*200 = 600
Cost from Stock = (60-55)*200 = 1000
Maximum gain = 1000 - 600 = 400