11.20. A trader creates a bear spread by selling a six-month put option with a $25 strike...

Question:

11.20. A trader creates a bear spread by selling a six-month put option with a $25 strike price for $2.15 and buying a six-month put option with a $29 strike price for $4.75. What is the initial investment? What is the total payoff (excluding the initial investment) when the stock price in six months is

(a) $23,

(b) $28, and

(c) $33.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Question Posted: