An investor constructs a bear put spread on ford between, Ask an Expert

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An investor constructs a bear put spread on Ford between the strike prices of $12 and $15. The put option with a strike price of $12 is trading at a premium of $0.21, and the put option with a strike price of $15 is trading at a premium of $0.89. Ignore trading commissions.

Which of the following statement regarding the bear put spread is correct?

A The breakeven share price is $15.68.

B The maximum loss on the trade is $12.68 per share.

C The maximum profit on the trade is $2.32 per share.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92428224

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