Chapter 06 · Section 6.1

Change of the profit/loss profile

How would it change the profit/loss profile of this spread if it were built with a long 105 call instead of a long 100 call?

a) Reduce the maximum profit.
• b) Increase the maximum profit.
  No. The profit/loss profile is the value of the option at expiration. Value at expiration is its intrinsic value. If the call has a higher exercise price.
  c) Decrease maximum loss if market falls.
  d) Increase maximum loss if market falls.
  e) a and c
  f) b and d