Call Options
An investor executes a bull call spread by buying an ABC 40 Call for $5 and selling an ABC 45 Call for $2. What is the maximum gain?
Bull call spread max gain = (Higher Strike - Lower Strike) - Net Premium. Net premium = $5 - $2 = $3 (debit). Max gain = ($45 - $40) - $3 = $2 x 100 = $200.
Complete Analysis & Legal Rationale
Bull call spread max gain = (Higher Strike - Lower Strike) - Net Premium. Net premium = $5 - $2 = $3 (debit). Max gain = ($45 - $40) - $3 = $2 x 100 = $200.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Matches the verified teaching point in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.