> Derivatives Question: Bull Spread?

Derivatives Question: Bull Spread?

Posted at: 2014-12-05 
a) the max gain is the difference in the strike prices, minus commissions.

b) the max loss is the amount paid plus commissions (if you're long).

1. Six-month call options with strike prices of $35 and $40 cost $6 and $4, respectively.



(i) What is the maximum gain when a bull spread is created from the calls?

(ii) What is the maximum loss when a bear spread is created from the calls?