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