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You have been following stocks of PayPal (PYPL) and feel somewhat bullish in the short term....

You have been following stocks of PayPal (PYPL) and feel somewhat bullish in the short term. You decided to trade this stock using options, specifically using a Money call spread. You bought one of the $200 PYPL call options contract with a premium of $12.55 and sold one of the $220 call options contract with a premium of $6. You kept this position until the expiration date when PayPal stock sells for $223.75, at that point you have a profit of $_____________ from this transaction.

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Expert Solution

You kept this position until the expiration date when PayPal stock sells for $223.75, at that point you have a profit of
=1*100*(MAX(223.75-200,0)-12.55)-1*100*(MAX(223.75-220,0)-6)
=1345.0000
from this transaction

jeff jeffy answered 2 years ago
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