Nine-month put options with strike prices of $55 and $60 cost $4 and $7, respectively. What...

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

Solutions

Expert Solution

Cost from put option = (7-4)*200 = 600

Cost from Stock = (60-55)*200 = 1000

Maximum gain = 1000 - 600 = 400

jeff jeffy answered 2 years ago

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