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.
c) Decrease maximum loss if market falls.
d) Increase maximum loss if market falls.
e) a and c
• f) b and d
  No. This would be the effect if the spread had been built with a lower exercise call.