A question on option spreads

Mormon

Newbie
4 0
Let's say you place a call credit spread on XYZ for 1 contract. You sell the 15 call and buy the 20 call. You received 1.00 for the spread.

What is the max gain?
What is the max loss?

How much of your cash balance would be held as option requirements after this spread is open on your account?

Thanks for your help

Mormon
 

SPX Trader

Newbie
3 0
Let's say you place a call credit spread on XYZ for 1 contract. You sell the 15 call and buy the 20 call. You received 1.00 for the spread.

What is the max gain?
What is the max loss?

How much of your cash balance would be held as option requirements after this spread is open on your account?

Thanks for your help

Mormon

Morman

Max gain is your initial credit
Max loss is the difference between the strikes e.g $5 less the credit of $1...so $4

Margin requirement at most brokers is difference between strike prices less credit...some also use difference between strikes..without taking into consideration the credit...

so for a 1 contract position you would make a max of $100....risk a max $400...and need $400 or $500 in margin capital

SPX
 
 
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