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 7, $210 and $215 calls, where options premiums are $7($210 call) and $5($215 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 profit/loss diagram of your position at expiration.

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