Suppose you purchase one WFM May 100 call contract at $5 and write one WFM May 105 call contract at $2. The maximum loss you could suffer from your strategy is
A) $200.
B) $300.
C) zero.
D) $500.

Question

Quizplus · Accepted Answer

The maximum loss occurs if the stock price is below $100 at expiration. You lose the premium paid for the 100 call ($5) and gain the premium received for the 105 call ($2), resulting in a net loss of $3 per share, or $300 for the contract.

Suppose You Purchase One WFM May 100 Call Contract at $5