AAFM Exam CWM_LEVEL_2 Topic 5 Question 76 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 76
Topic #: 5

Section C (4 Mark)

Mr. Dinesh constructs a BULL Call Spread Strategy with one Nifty Call Option having a Strike price of Rs. 4100 available at a premium of Rs. 170.45 and another Nifty Call option with a strike price Rs. 4400 at a premium of Rs. 35.40.

The Net Payoff of BULL Call Spread Strategy

* If Nifty closes at 4300

* If Nifty closes at 3700

A72.05 and -125.05

B64.95 and -135.05

C-115.05 and 84.95

D-65.05 and 0

Show Suggested Answer

Suggested Answer: A

by Rolande at Apr 30, 2024, 11:21 AM

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Giuseppe

1 months ago

Wait, did Mr. Dinesh construct this strategy or is he just a spectator? I hope he's not the one who's going to get bull-ied by the market.

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Angelica

2 days ago

He must have analyzed the market before making that decision.

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Carol

19 days ago

He constructed the BULL Call Spread Strategy with Nifty Call Options.

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Floyd

1 months ago

Aha, I think I've got it! Time to put on my options trading hat and solve this puzzle.

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Desmond

21 days ago

I think the answer is A) 72.05 and -125.05

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Minna

2 months ago

Okay, let's see... 4100 Call at 170.45, 4400 Call at 35.40, and Nifty closing at different levels. *scratches head* This is where my calculator comes in handy.

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Mona

6 days ago

C) -115.05 and 84.95

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Wilson

7 days ago

B) 64.95 and -135.05

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Cristy

9 days ago

A) 72.05 and -125.05

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Tom

2 months ago

A BULL Call Spread, huh? Sounds like a bull is trying to spread its wings and fly, but the options prices might clip its wings.

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Narcisa

1 months ago

User 1

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Margery

1 months ago

User 2

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Blondell

2 months ago

User 1

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Benton

2 months ago

Hmm, this is a tricky one. I better brush up on my options trading strategies before tackling this question.

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Laurel

1 months ago

No, I believe it's B

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Kimi

1 months ago

B) 64.95 and -135.05

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Chantell

2 months ago

I think the answer is A

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Kirk

2 months ago

A) 72.05 and -125.05

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Dewitt

2 months ago

I'm not sure, but I think the answer might be B) 64.95 and -135.05. Can someone explain the rationale behind the calculation?

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Dino

3 months ago

I agree with Maryanne, because the net payoff for the BULL Call Spread Strategy is calculated by subtracting the total premium paid from the difference between the two strike prices.

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Maryanne

3 months ago

I think the answer is A) 72.05 and -125.05

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