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An investor constructs a bear put spread on Ford between the strike prices of $12 and $15. The put option with a strike price of
An investor constructs a bear put spread on Ford between the strike prices of $12 and $15. The put option with a strike price of $12 is trading at a premium of $0.21, and the put option with a strike price of $15 is trading at a premium of $0.89. Ignore trading commissions.
Which of the following statement regarding the bear put spread is correct?
A | The breakeven share price is $15.68. |
B | The maximum loss on the trade is $12.68 per share. |
C | The maximum profit on the trade is $2.32 per share. |
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