CFA CFA Level 3 Could a bull spread have zero initial cost?

Could a bull spread have zero initial cost?

  • This topic has 3 replies, 4 voices, and was last updated May-18 by Matilda.
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    • stpecurry
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      Could a bull spread have zero initial cost? Why or why not?

      Thanks

    • mattyc
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      No becuase you are buying and selling options with different strike prices.  In a bull call spread you’d be buying a call with a lower strike and selling a call with a higher strike so you would have a net expense.  A bull put spread you sell a put with a higher strike and buy a put with a lower strike so you have a net income.

    • Sultan14
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      You have same premium cost for options with the same delta. Two call/put options with different strike price can never have the same delta. Only a combination of a put and call or two calls/put with the same strike price will have the same initial cost.

    • Matilda
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      No.

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