Question: You currently have a position on a spread, which is a combination of a long call and a short call on the same stock. The

You currently have a position on a spread, which is a combination of a long call and a short call on the same stock. The excise price is $30 for the long call and $40 for the short call. You paid a premium of $2 for the long call and received a premium of $1 for the short call. Both options have the same expiration date.If the stock price is $45, what is your net income?

Select one:

a. $9

b. $8

c. $4

d. $10

e. $12

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

3. (20 points) Consider the composite beam illustrated in fig. 3. The beam is comprised of wood and steel, as shown in the cross-section view, along with the dimensions. Assume that Ewood = 15 GPa...

You currently have a position on a spread, which is a combination of a long call and a short call on the same stock. The excise price is $ 2 0 for the long call and $ 3 0 for the short call. You paid...

You currently have a position on a collar, which is a combination of a long stock and a long put and a short call on the same stock. The excise price is $30 for the long put and $40 for the short...

Hello Ahmed, would you be able to help me with my Investments homework? It's due tomorrow and I really need a tutor to look at it, because I'm not sure if I've done it correctly. I saw you helped a...

A bear spread based on call options is the combination of a long call with strike price 2 and a short call with strike price 1, where 1

2. Carter Bank makes a 3-year loan for $1,000 with an annual coupon rate of 8%. a. Compute the annual coupon bond payment of a U.S. Treasury bond with a risk-free rate of 8%. b. Suppose the spot rate...

i dont want my questions to answer the anonymous because they answer wrong please can you help me with all the questions but the correct answer please XYZ stock is trading at $100 (and pays no...

XYZ stock is trading at $100 (and pays no dividends). The effective 3 month interest rate r = 1% for all the following questions. Also, I highly recommend you use a spreadhseet, it's so much easier!...

16. The following option prices were observed for calls and puts on a corn futures on July 6 of a particular year. Use this information for problems (i) to (iv). The futures price was 365 cents per...

TRUE OR FALSE Options give the right but not the obligation to exercise them? European options can be exercised only at maturity The option price is higher than its time value A put option provides...

Capital assets include which of the following? I. Depreciable equipment used in Robbie's business. II. A new car held for resale by Andrews Auto Sales. III. Accounts receivable held by Jessica...

First, what is "risk" in business? How can we measure risk? Next, what is the relationship between risk and return? (Brief explanation) Next, breakdown WACC and CAPM What is the formula for WACC?...

Which of the following best explains the principle of asset valuation in economics? Asset valuation involves determining the future profits an asset will generate, without considering the time value...

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".