Suppose you purchase one WFM May 100 call contract at $5 and write one WFM May 105 call contract at $2. The maximum loss you could suffer from your strategy is Select one:

a.$200.

b.$300.

c. zero.

d.$500.

The correct answer is B that is $300

Explanation:

The amount of maximum loss which is suffered from the strategy is computed as:

Amount of maximum loss = (WFM May 100 call contract price + WFM May 105 call contract price) * 100

= (-$5 + $2) * 100

= - $3 * 100

= - $300

Note: Options contracts are for 100 shares of the stock, so the quoted premium is multiplied by 100.