You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes:
-To establish a bull money spread with puts you would _______________.
A) sell the 55 put and buy the 45 put
B) buy the 45 put and buy the 55 put
C) buy the 55 put and sell the 45 put
D) sell the 45 put and sell the 55 put

Question

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: 
-To establish a bull money spread with puts you would _______________.
A) sell the 55 put and buy the 45 put 
B) buy the 45 put and buy the 55 put 
C) buy the 55 put and sell the 45 put 
D) sell the 45 put and sell the 55 put

Quizplus · Accepted Answer

A bull money spread with puts involves selling a higher strike put (55) and buying a lower strike put (45) to profit from a rise in the underlying asset's price.

You Are Cautiously Bullish on the Common Stock of the Wildwood