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

$300

Explanation:

Calculation for What is the maximum gain when a bull spread is created by trading a total of 200 options

First step is to calculate the cost amount

Cost =6×100−4×100

Cost=$200

Second step maximum payoff of a stock price that is greater than $40 will be $500

Hence,

Maximum gain=$ 500 −$200

Maximum gain = $300

Therefore the maximum gain when a bull spread is created by trading a total of 200 options will be $300

answer; at prices that violate government price regulations;