Probleman options trader believes that acme stock which is, Ask an Expert

Finance

Problem:

An options trader believes that ACME stock which is trading at $43 is going to rally soon and enters a bull put spread by buying a JUL 40 put for $100 and writing a JUL 45 put for $300. Thus, the trader receives a net credit of $200 when entering the spread position. If the stock rises to $50, then what is the trader's profit?

Note: Please provide equation and explain comprehensively and give step by step solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148331

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