Mathew simultaneously sold a July 40 put on ZXY stock for $200 and bought a July 35 put for $75. His maximum loss is ______and his maximum gain is______ .
A) $375; $125
B) $375; unlimited
C) $500; $125
D) $275; $125

Question

Quizplus · Accepted Answer

Mathew's maximum loss is the difference in strike prices minus the net premium received, which is $500 - $125 = $375. His maximum gain is the net premium received, which is $200 - $75 = $125.

Mathew Simultaneously Sold a July 40 Put on ZXY Stock