SIE Exam Question 292: Answer and Explanation

Question: 292

The amount that is paid for a call vertical spread is the difference between

• A. The premium received for the long call and the strike price
• B. The premium paid for the short call minus the strike price
• C. The premium received for the long call and the premium paid for the short call
• D. The premium paid for the long call and the premium received for the short call

Correct Answer: D

Explanation:

D: The premium paid for the long call minus the premium received for the short call equals the amount that is paid for the vertical spread.