Question
An investor buys a two-month XYZ call option contract with a $25 strike price, and sells a two month XYZ call option contract with a
An investor buys a two-month XYZ call option contract with a $25 strike price, and sells a two month XYZ call option contract with a $30 strike price. The premium is $2 for the call with the $25 strike price. The premium is $1 for the call with the $30 strike price. What is the maximum potential profit for this position?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
This strategy is known as a bull call spread It involves buying a call option long call with a lower ...
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Step: 2
Step: 3
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
