Question

In: Finance

A: A trader creates a bull call spread by buying an option for $12.00 at the...

A: A trader creates a bull call spread by buying an option for $12.00 at the $100 strike price and selling an option at $5.00 at the $120 strike price.   What is the net payoff per share (enter 4.00, not 400, for one spread - the gross payoff of the spread minus the cost of the spread) when the stock price in six months is $99?

B: A trader creates a bull call spread by buying an option for $12.00 at the $100 strike price and selling an option at $5.00 at the $120 strike price.    What is the net payoff per share (enter 4.00, not 400, for one spread - the gross payoff of the spread minus the cost of the spread) when the stock price in six months is $122?

Solutions

Expert Solution

1.
=MAX(99-100,0)-12-MAX(99-120,0)+5
=-7

2.
=MAX(122-100,0)-12-MAX(122-120,0)+5
=13

jeff jeffy answered 2 years ago
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