Suppose you purchase one IBM May 100 call contract at $9 and…
Suppose you purchase one IBM May 100 call contract at $9 and write (sell) one IBM May 110 call contract at $3. Describe the profit diagram associated with this strategy (what is the shape of the combined graph)? The maximum potential profit of your strategy is ________ if both options are exercised (i.e. if the stock price goes to 120). What is the maximum that you can lose with this position you have created? SHOW YOUR WORK