profit on collar

CFA Level III
#1

Current share price is 91, buy 88 call for $4.4 and sell 94 call for $1. What is maximum profit?

#2

94-88-4.4+1

#3

Is this a collar? Looks like a bull spread

#4

A collar has the same payoff diagram as a bull spread. Only with the collar, you own the underlying.

#5

and you own put instead of a call at lower strike

#6

sorry…i meant bull spread

#7

Good point

#8

payoff diagram might be same but absolute value might not be same.

collar you also hold underlying while in butterfly spread you don’t.

What is it, a collar or a butterfly spread?

#9

^ neither - sounds like a bull spread

#10

a collar (or a bull spread) looks nothing like a butterfly spread… where are you getting a butterfly spread from in this conversation?

#11

And to answer the actual question, JJ is correct.

#12

blush