The three-month 90-strike call is priced at $5 and the three-month 100-strike call is priced at $3.What is the maximum possible net payoff on a bullish vertical spread using these options?

Question

Quizplus · Accepted Answer

The maximum possible net payoff on a bullish vertical spread is calculated by subtracting the cost of the spread from the difference in strike prices. Here, the spread costs $5 - $3 = $2 (buying the 90-strike call and selling the 100-strike call). The difference in strike prices is $100 - $90 = $10. Therefore, the maximum net payoff is $10 - $2 = $8.

The Three-Month 90-Strike Call Is Priced at $5 and the Three-Month