Question
You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $60
You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $60 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: Wildwood Corporation Underlying Stock price: $60.00
Expiration Strike Call Put
June $ 55.00 $ 9.50 $ 2.50
June $ 60.00 $ 5.00 $ 4.00
June $ 65.00 $ 2.50 $ 8.50
Suppose you establish a bullish money spread with the puts. In June the stock's price turns out to be $64. Ignoring commissions, the net profit on your position is
A. $500
B.$540
C. $400
D. $940
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