What is the spread profit-to-loss ratio

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Reference no: EM133113085

Look at the following information. (Consider both call and put spreads). 

Security

Qty

Bid

Ask

Invesco QQQ Trust ETF

 

$399.61

$399.63

QQQ 14 JAN 2022 405 CALL

X

$0.44

$0.45

QQQ 14 JAN 2022 410 CALL

X

$0.07

$0.10

QQQ 14 JAN 2022 415 CALL

X

$0.01

$0.04

QQQ 14 JAN 2022 390 PUT

X

$0.35

$0.36

QQQ 14 JAN 2022 385 PUT

X

$0.17

$0.19

QQQ 14 JAN 2022 380 PUT

X

$0.10

$0.12

a. If you decide to enter into 10 long butterfly spread, how would it be structured, and what would the potential profit or loss be?

b. What is the spread's profit-to-loss ratio?

c. How much margin (buying power) does this position require?

d. What are the breakeven points?

e. If there is a 90% chance that the stock's value will fall outside the breakeven points for the spread, what is the expected return? 

Reference no: EM133113085

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