Question: Consider the following option strategy, called the call spread. It involves buying one call option with a lower strike price and selling one call

Consider the following option strategy, called the "call spread". It involves buying

Consider the following option strategy, called the "call spread". It involves buying one call option with a lower strike price and selling one call option with a higher strike price. (1) Consider the following call spread. (4p) Buy a call option with strike price = $100 Sell a call option with strike price = $150 Plot its payoff as a function of the underlying stock price when the option expires. (2) Suppose the price of the $100 call is $2 at t = 0, and the price of the $150 call is $0.5 at t = 0. Plot the above payoff graph again. What is the range of stock price at option expiration such that this call spread yields non- negative profit? (4p)

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