It’s Friday, and you know what that means… pop quiz! Just like last week, the first person to get the answer to our weekly pop quiz correct gets an awesome prize. Just post your answer in the comments and we’ll let you know if you won!
This week’s question:
A ratio spread is composed of a long contract and two short contracts (or two long contracts and one short contract), in the same month. Assume we’re buying two $75 calls on TKRT, and selling one $80 call, and that we pay a debit of $4.25 for this ratio spread.
What’s our profit (or loss) if we hold this trade to expiration, at which point TKRT is trading at $82.50?
Remember, the first person to get the answer correct wins this week’s awesome prize! Good luck!