1)
An option trader could have established a
vertical call spread on QQQ by purchasing QQQ/October/55 for $6/share and
selling QQQ/October/60 for $4/share. QQQ stock is selling for $61/share.
a.
What is his investment?
b.
Calculate gain/loss for the following cases:
i.
The stock moves to $50
ii.
The stock moves to $80
c.
What is maximum potential profit?
d.
What is maximum potential loss?
e.
What is the risk/reward ratio?
