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Six-month call options with strike prices of \$35 and \$40 cost \$6 and \$4, respectively. What is the maximum gain when a bull spread is created from the calls?

Six-month call options with strike prices of \$35 and \$40 cost \$6 and \$4, respectively. What is the maximum loss when a bull spread is created from the calls?

Six-month call options with strike prices of \$35 and \$40 cost \$6 and \$4, respectively. What is the maximum gain when a bear spread is created from the calls?

Six-month call options with strike prices of \$35 and \$40 cost \$6 and \$4, respectively. What is the maximum loss when a bear spread is created from the calls?

#### Solution Preview

Six-month call options with strike prices of \$35 and \$40 cost \$6 and \$4, respectively. What is the maximum gain when a bull spread is created from the calls?

Bull spread is to buy a call with strike price X1 at higher premium and sell a call with a higher strike price X2 > X1 with lower premium.

X1 = \$35 c1 = \$6 X2 = ...

#### Solution Summary

This solution is comprised of a detailed explanation to calculate the maximum gain and maximum loss for bull spread and bear spread call options.

\$2.19