What is your profit from selling the call

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Question - You sold (wrote) 1 call option on IBM stock with an exercise price of $45 for $8.23 and bought 1 call option on the same stock with an exercise price of $55 for $2.92. Both options expire in 5 months. Such a portfolio is called a bear spread.

1. What is your profit from selling the call with K=$45 if the stock price is $20 in 5 months (in $)?

2. What is your profit from buying the call with K=$55 if the stock price is $50 in 5 months (in $)?

3. What is your total profit if the stock price is $100 in 5 months (in $)?

Reference no: EM132969417

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