Long $3.80-$4.30 Call Spread (Also known as a Long $3.80-$4.30 Bull Spread) +1 CH0C380030c –1 CH0C430015c What is the...

Question

Question

+1 CH0C380030c

–1 CH0C430015c

What is the net payoff value (in $/bu. + or -) of this combination when the price of CH0 is $4?

Answer 1

Answer #1

We have long at $3.80 and short at $4.30 for call option. The quantity of long and short option is 30 and 15 respectively as given.

If the value of CH0 ends up at $4, the long position of $3.80 will become receivable and the short position will lapse as follows:

+1 CH0C380030c - 1 CH0C430015c

= (4-3.8)*30- 0

= + $/bu 6 net receivable

Answer 2

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