1) Suppose an investor buys three April $42 ABC Co. calls at $1.55 and simultaneously sells three April $36 calls at $3.40 when the stock is trading at $36.75 (each option relates to one stock) The maximum amount of loss is: Select one:

a. $5.55 b. Unlimited c. $12.45 d. $6.00

2) The gain or loss if the stock trades to $50 before the options expire is:

Select one:

a. Loss of $12.45 b. Unlimited gain c. Loss of $13.25 d. Gain of $5.55