You Are Cautiously Bullish on the Common Stock of the Wildwood

question 32

Multiple Choice

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes:
-To establish a bull money spread with calls you would _______________.

• A) buy the 55 call and sell the 45 call
• B) buy the 45 call and buy the 55 call
• C) buy the 45 call and sell the 55 call
• D) sell the 45 call and sell the 55 call

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Definitions:

Payoff Table

A table showing the possible outcomes or gains for different decisions or strategies under various conditions.

Opportunity Loss Table

A tabular representation used in decision making to outline the potential losses for not choosing the best alternative.

Expected Monetary Value

A statistical technique used to calculate the average outcome when the future includes scenarios that may or may not happen.

Dishwasher Designs

Various structural and functional configurations of dishwashers, including capacity, layout, and technology, to meet specific user needs or preferences.