Question

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $64 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:

Wildwoood Corp Underlying Stock price: $64.00
Expiration Strike Call Put
June 59.00 9.90 3.40
June 64.00 5.20 4.40
June 69.00 2.70 8.90
Suppose you establish a bullish spread with the puts. In June the stock's price turns out to be $58. Ignoring commissions, the net profit on your position is__________.a. $100.b. $185.c. $628.d. $528.

Answer 1

a. $100.

Step-by-step explanation:

The wildwood Corp will consider the spot price to find the difference in call and put. The maximum price for profit is either 0 or $58 - $64

Profit = [ $58 - $64 - $69 - $64 ] * 100