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The following European call and put options exist in the market (all with the same maturity). Strike Price (in ) Call Price(in ) Put Price(in
The following European call and put options exist in the market (all with the same maturity).
Strike Price (in ) | Call Price(in ) | Put Price(in ) |
30 | 11 | 4 |
40 | 6 | 9 |
A bull spread is a strategy which profits from moderate increases in stock prices, but does not benefit extra from dramatic price rises. Suppose you sell a bull spread to your client using the options quoted above. If the stock price at maturity is 33, your overall profit or loss on the trade is
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