Question: please check if my answer is correct or not An investors considers making a bull spread using 1-year European calls on S&P 500 index. The
please check if my answer is correct or not
An investors considers making a bull spread using 1-year European calls on S&P 500 index. The investor sees two European calls; one with the strike price of 1,900 is priced at $130 and the other with the strike price of 2,000 is priced at $50. Find the profit of this bull spread at the option expiration. (Note that the profit may differ depending on the future stock price ST .)
| Action | Payoff at time T | ||
| ST K2 | K2 > ST K1 | K1 > ST | |
| long call with K1 | ST-1900 | ST-1900 | 0 |
| short call with K2 | -(ST-2000) | 0 | |
| net | 100 | ST-1900 | 0 |
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