# Mock Exam Question #42

is the number of \$7,000 for the maximum potential loss correct? It seem to me that it should \$14,000 0.7*100*200 = \$14,000 Please smart ppl help me.

c1+c3-2c2 will give you 7k

I still do not get it because (4.2-2*2+.5)200*200 = \$14,000 Please show me your calculation.

comp_sci_kid: Would you please post your calculation. Something seems wrong with. That 's just in algebra. Am I crazy or what?

it was 200 long 200 short. why do you do 200*200? that is incorrect. 200 long is 100 long first position 100 long second long position

It’s 7,000 i dont remember it exactly but i think the it was \$7 * 10 * 100 or something like that.

If this was the Butterfly Spread - it was 100 long at the low exercise price, 200 short at the middle price and 100 long at the high exercise price.

Yeah, total 400 calls, 100 each. And btw tibwa, your explanation of the famous Sample3.11 is correct!

Wow! I am losing, that was the dumest that I ever than. I used 200 contracts everywhere. Thanks smart ppl. I can’t live without you.

tibwa Wrote: ------------------------------------------------------- > Wow! > > I am losing, that was the dumest that I ever than. > I used 200 contracts everywhere. > > Thanks smart ppl. I can’t live without you. yeah i made bunch of stupid mistakes on this item set too. ridicilous

something about reading it off the screen seems to make me prone to stupid mistakes.

foxiegroup: Anytime foxie, I thinkl I need to stock drinking Red Bull because it seems to this melange of Red Bull , Strong coffee and Syntec D for alergy does not work for me.

m2, I will stop sugar and caffeine for at least 2 months after the exam. I am living on those 2 things now, and is trading long term funcationality with short term boost.

reminds me of a rock climb in NY called “Carbs and Caffeine”…one of the best names ever…

yeah, the 200 calls and 200 puts through me off…I assumed it was 200 -400 + 200 and ended up somewhere else…

yeah, the 200 calls and 200 puts threw me off…I assumed it was 200 -400 + 200 and ended up somewhere else…

I must be lost but I still don’t get this question, it really chaps me that I got it wrong cuz it was not hard. But the max loss was .7 for each set of the 4 calls and each contract was 100 shares and he went long 200 and short 200. How do you get to 7000?

100 long at the low exercise price, 200 short at the middle price and 100 long at the high exercise price. I dont remember the premiums but it would be -100*Low Premium + 200*Medium Premium -100*High Premium Say that value was \$70. And they purchased a 100 Butterfly swaps that would be \$7,000 I dont have the wording so I’m assuming pricing here.