If you were to purchase an October option with an exercise price of 50 for 8 and simultaneously sell an October option with an exercise price of 60 for 2,you would be
A) Bullish and taking a high risk.
B) Bullish and conservative.
C) Bearish and taking a high risk.
D) Bearish and conservative.
E) Neutral.

Question

Quizplus · Accepted Answer

This strategy is known as a bull call spread, where you buy a call option with a lower exercise price and sell a call option with a higher exercise price. It is a bullish strategy with limited risk and limited profit potential, making it conservative.

If You Were to Purchase an October Option with an Exercise