Question: Problem 5. A trader creates a bear spread by selling a six-month put option with a $25 strike price for $2.55 and buying a six-month

Problem 5. A trader creates a bear spread by selling a

Problem 5. A trader creates a bear spread by selling a six-month put option with a $25 strike price for $2.55 and buying a six-month put option with a $29 strike price for $4.75. What is the initial investment? What is the total payoff when the stock price in six months is (a) $20, (b) $27.5, and (c) $35

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