SIE practice questionmediumMax gain/loss calculations
An investor establishes a bull call spread by buying a DEF 50 call for $6 and selling a DEF 60 call for $2. What is the maximum gain?
- A$1,000
- B$600✓ Correct answer
- C$200
- D$400
Explanation
Why B — $600
A bull call spread's maximum gain is the difference in strikes minus the net debit. Here, ($60 - $50) - ($6 - $2) = $10 - $4 = $6 per share, or $600 for one contract.
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