Suppose we have the following information for the index $S$:

current price = $\$1000$risk free rate$4 \%$convertible semiannualy What is the net premium to create a$ \$1000- \$ 1050$bull spread using call options? So I want to buy the$ \$1000$ call option and sell the $\$ 1050$call option. The price of a 6-month$ \$1000$ call is $93.809$. The price of a 6-month $\$ 1050$call is$71.802$. So why is the net premium$93.809 - 71.802$? If I am buying (selling) something shouldn't I be losing (making) money? Hence it should be$-93.809 + 71.802\$?

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closed as off topic by Joshua Chance, Tal Fishman, Bob Jansen, Steve, olaker♦Sep 18 '11 at 19:36

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