Question: Spreads offer the potential for a small profit while limiting the risk. Construct a bull money spread using Amazon s ( AMZN ) March 7
Spreads offer the potential for a small profit while limiting the risk. Construct a bull money spread using Amazons AMZN March $ and $ calls, where options premiums are $$ call and $$ call respectively. Hold until the options expire. a What is the cost of the spread? b What is the maximum possible loss on this transaction? c What is the maximum possible profit on this transaction? d At what stock price or prices at the expiration date will the position show a zero profit? e Graph the profitloss diagram of your position at expiration.
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