Series 7 Exam Question 88: Answer and Explanation

Question: 88

An investor buys 1 LMN May 80 call and sells 1 LMN Aug 80 call. This strategy is a

• A. vertical spread
• B. horizontal spread
• C. diagonal spread
• D. long straddle

Correct Answer: B

Explanation:

B. In this case, the strike prices are the same, and just the expiration months are different. So, it is a horizontal (calendar) spread.