How much will the spread cost

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Reference no: EM132545785

The following prices are available for call and put options on a stock priced at $50. The March options have 90 days remaining and the June options have 180 days remaining. The Black-Scholes model was used to obtain the prices.

Calls Puts Strike March June March June

45 6.84 8.41 1.18 2.09

50 3.82 5.58 3.08 4.13

55 1.89 3.54 6.08 6.93

Use this information to answer the following questions. Assume that each transaction consists of one contract (100 options) unless otherwise indicated.

consider a bull money spread using the March 45/50 calls.

Question 1- How much will the spread cost?

Question 2- What is the maximum profit on the spread?

Question 3- What is the maximum loss on the spread?

Question 4- What is the profit if the stock price at expiration is $47??

Question 5- What is the breakeven point?

Reference no: EM132545785

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