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Suppose you purchase one WFM May 100 call contract at $5 and write one WFM May 105 call contract at $2. The maximum loss you could suffer from your strategy is Select one:
a.$200.
b.$300.
c.zero.
d.$500.

Respuesta :

Answer:

The correct answer is B that is $300

Explanation:

The amount of maximum loss which is suffered from the strategy is computed as:

Amount of maximum loss = (WFM May 100 call contract price + WFM May 105 call contract price) × 100

= (-$5 + $2) × 100

= -$3 × 100

= -$300

Note: Options contracts are for 100 shares of the stock, so the quoted premium is multiplied by 100.

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