CFA Level 3 | Derivatives: Bull Call Spread

[@venkatraghavanr5169]

No one could have explained much better than this. Really appreciate.

[@FabianMoa]

No problem, Venkat

[@jonathanleong01]

Happy I've found this.

[@nadiga18]

awesome explanation thanks a mil!!

[@satishnanda2996]

Why is the short call at premium -4 and not +4 @1:52 , i couldn't understand that part .

[@FabianMoa]

Hi Satish, if you use +4, you are looking at the short option from a cashflow perspective (i.e. receiving +4 for selling the option). In my workings, I look at the market value perspective (or a balance sheet view), where asset is positive and liability is negative. Since the short option is a liability, hence I write it as -4. Both methods can be used, just have to apply it consistently.

[@satishnanda2996]

Thank you so much helped a ton ! ❤️