Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. in a call option bull spread, why is the short opt

In a call option bull spread, why is the short option position considered covered?

70.2K

Verified Solution

Question

Finance

In a call option bull spread, why is the short option positionconsidered covered?

Answer & Explanation Solved by verified expert
3.9 Ratings (481 Votes)
In a call option bull spread We buy a call option with lower strike K1 Long position We short a call option with higher strike K2 Short position K2 K1 Payoff from    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

In a call option bull spread, why is the short option positionconsidered covered?

Other questions asked by students

Q

Calculate the pH. Please show steps. Nitric acid 0.00125 M Acid Potassium hydroxide 0.00133 M Base Ammonia 0.00120 M Base Hypochlorous acid...

Chemistry
Q

Starset Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new...

Finance
Q

5. Consider an airplane with wingspan 40 ft, wing area 250 ft2 , and weight 12,000...

Mechanical Engineering
Q

A short dipole of dipole moment pj is the centre of a spherical cavity inside...

Physics
Q

AABC is congruent to ADEF Find x and then m CAB and m FDE A...

Geometry
Q

For intervals of values, enter your answer using interval notation. Here are some examples of...

Basic Math
Q

In the diagram below MN is parallel to JK If MN is 3 more than...

Basic Math
Q

Find the area of the following region expressing your result in terms of the positive...

Calculus
Q

Capwell Corporation uses a periodic inventory system, the balance sheet approach to estimate uncollectibles, and...

Accounting
Q

The company is now in the process of preparing a production budget for the second...

Accounting
Q

Wescott Company has three divisions: A, B, and C. The company has a hurdle rate...

Accounting
Q

29. Rob owns a manufacturing company - during 2023 he invests in equipment for his...

Accounting