1) A spread is a combination of two or more call options on the same stock with different strike prices or terms to expiration. Some options are bought and others are sold. Consider a bullish margin option strategy in which you buy a call option with a strike price of $35 at a price of $4 and sell a call option with a strike price of $50 at a price of $2. ,fifty. If the price of the underlying stock rises to $60 at expiration what is your net income?

2)An investor buys a stock for $28 and sells the stock for $0.40 with a strike price of $24. You also sell a call option on the same underlying stock for $0.40 with a strike price of $30 and the same expiration date. What is the value of your portfolio, net of proceeds from the options, if the stock price ends at $35 on the expiration date?

Answer rating: 100% (QA)

1 The net income for the bullish margin option strategy can be calculated as follows Net income Maxi... View the full answer