BULL SPREAD

Call options with the strikes of $$16\mathrm{.}00$ and $$20\mathrm{.}00$ are available on the exchange.

a$.$ Explain how to construct a bull spread from the above call options.

b$.$ Draw a graph showing payoff of the spread for various realizations of the underlying asset price.

c$.$ Determine the minimum and maximum possible payoffs of the spread.