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Suppose you buy a call option with an exercise price of $50 and a cost of $5. At the same time, you sell a call
Suppose you buy a call option with an exercise price of $50 and a cost of $5. At the same time, you sell a call option with an exercise price of $55 and a cost of $3. The two calls have the same underlying asset and the same expiration. What is the cost of this position and what is this position called? At what stock price or prices will the position show a zero profit? What is the worst loss that the position can incur? What is the best outcome and for what range of stock prices does it occur?
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