A European 3-month call option on Bank W shares with exercise price of 50 is priced 6 and a similar call option with exercise price of 60 is priced 4. Calculate the net profit or loss on a long bull spread position for the following share prices at expiration: i. 45

I know answer is -2, but why is the 6 negative and 4 positive ? iv. Draw a diagram to show the outcomes.

Answer rating: 100% (QA)

In a long bull spread position you buy a lower strike call option and simultaneously sell a higher s... View the full answer