SIE practice questionhardMax gain/loss calculations
An investor sells a credit put spread by selling a 50 put at $5 and buying a 45 put at $2. What is the maximum gain?
- A$250
- B$200
- C$500
- D$300✓ Correct answer
Explanation
Why D — $300
Net premium = $5 - $2 = $3. Maximum gain in a credit spread is net premium, or $3 x 100 = $300.
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