# What is the net premium of a bull spread option? [closed]

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\$?

-

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

Questions on Quantitative Finance Stack Exchange are expected to relate to quantitative finance within the scope defined in the FAQ. Consider editing the question or leaving comments for improvement if you believe the question can be reworded to fit within the scope. Read more about closed questions here.