Six-Month Call Options with Strike Prices of $35 and $40

question 8

Multiple Choice

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 by trading a total of 200 options?

• A) $100
• B) $200
• C) $300
• D) $400

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Definitions:

Sufficient Condition

A condition or set of conditions that, if met, ensures the occurrence or truth of another condition.

Equal Length

Describes two or more objects or segments having the same measurement from end to end or boundary to boundary.

Necessary Condition

A prerequisite necessity for the truth or occurrence of an event or statement.

Effect

A change that is a result or consequence of an action or other cause.