Problem
A trader constructs a bull spread on a stock currently trading at S_0 = \100$ by:
- Long 1 call with strike K_1 = \95C_1 = $10$
- Short 1 call with strike K_2 = \110C_2 = $3$
Both calls share the same expiry; each contract covers 100 shares.
Questions
- What is the net premium paid per share?
- What are the maximum profit and maximum loss per share?
- What is the breakeven stock price at expiry?
- What is the profit per share if S_T = \105$?