Question: You create a bear call spread by writing eight contracts (100 shares per contract) on the May $40 call option (C 1 is $3.88 per

You create a bear call spread by writing eight contracts (100 shares per contract) on the May $40 call option (C1 is $3.88 per unit) and buying eight contracts on the May $44.5 call option (C2 is $1.32 per unit).

  1. What is the profit at expiration if ST = 34, if ST = 41, if ST = 43, if ST = 45, and if ST = 53?
  2. What is the breakeven asset price at expiration?

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