SPOILER - Schweser PM Exam 1 max, difference, nothing, between

smuggycfa

Q18.1 - can someone explain this to me. Reneau wants to exploit the S&P forecast of outperformance with 2 call options. Obviously they will buy a call spread. Why does the answer then talk about the max loss being the difference between the 2 strikes - if they are long it would be the max gain.
There is nothing in Errata so can only assume it is me

Makavelim3

it’s correct. the max loss is the difference in the COST of the strikes (net cost of the strategy), not the strike prices themselves. but now that i look at it again, the wording is pretty crappy.

b_sea93

stupid…
thanks again