AAFM CWM_LEVEL_2 Exam - Topic 5 Question 76 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 76
Topic #: 5

Section C (4 Mark)

Mr. Dinesh constructs a BULL Call Spread Strategy with one Nifty Call Option having a Strike price of Rs. 4100 available at a premium of Rs. 170.45 and another Nifty Call option with a strike price Rs. 4400 at a premium of Rs. 35.40.

The Net Payoff of BULL Call Spread Strategy

* If Nifty closes at 4300

* If Nifty closes at 3700

A72.05 and -125.05

B64.95 and -135.05

C-115.05 and 84.95

D-65.05 and 0

Show Suggested Answer

Suggested Answer: A

by Rolande at Apr 30, 2024, 11:21 AM

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Dana

8 months ago

Not sure about that, B seems more accurate to me.

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Britt

8 months ago

I'm leaning towards option A for the payoff calculations.

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India

8 months ago

Wait, how can it be negative if Nifty closes at 3700?

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Aliza

9 months ago

I think the payoff at 4300 is definitely positive!

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Precious

9 months ago

The strike prices and premiums look solid for a bull call spread.

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Rodrigo

9 months ago

I feel like I should be able to calculate this, but I keep mixing up the premiums and the strike prices. I hope I remember the formula correctly!

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Mica

9 months ago

I practiced a similar question last week, and I think the payoff at 3700 would definitely be negative, but I’m confused about the payoff at 4300.

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Cassie

9 months ago

I think if Nifty closes at 4300, we might have a positive payoff, but I can't recall how to calculate the exact numbers.

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Clemencia

10 months ago

I remember that in a bull call spread, we buy a lower strike call and sell a higher strike call, but I'm not sure about the exact payoffs at those specific Nifty levels.

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Virgie

10 months ago

This is a tricky one. I'll need to be really careful with the calculations to make sure I don't make any mistakes. Maybe I'll try a practice problem or two first to get the hang of it.

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Lavera

10 months ago

Okay, I think I've got this. I'll need to calculate the net payoff by subtracting the cost of the lower strike call from the payoff of the higher strike call, and then do the same for the other Nifty closing price. Should be doable.

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Dalene

10 months ago

Hmm, I'm a bit unsure about how to approach this. I'll need to review my notes on bull call spread strategies and make sure I understand the mechanics before attempting to solve this.

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Shaun

10 months ago

This looks like a straightforward options trading question. I'll need to carefully calculate the payoffs for the bull call spread strategy at the given Nifty closing prices.

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Gracia

10 months ago

Hmm, I'm not too familiar with Microsoft Stream, so I'll need to think this through carefully. Let me start by recalling what I know about the Microsoft 365 suite and see if that gives me any clues.

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Sophia

10 months ago

I remember practicing with a similar question, and I think the Traffic Matrix was mentioned as well. But I don't know if it's the correct answer here.

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Earleen

10 months ago

Okay, let me think this through. The checklist is about securing and evaluating the electronic crime scene, so the options related to helping the victim, transmitting messages, and requesting additional help seem relevant. But blogging about it doesn't fit, so I'll go with D.

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Deonna

10 months ago

I'm not entirely sure, but I remember something about simulation methods being used for risk analysis too. Can that be right?

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Jess

10 months ago

I feel like the answer should be ed, but what if it's sed? I remember both of those being mentioned, but distinctions were tricky.

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Lou

10 months ago

I remember studying pxGrid integration, but I'm unsure about whether Cisco FMC acts as a client or server in this setup.

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Giuseppe

1 year ago

Wait, did Mr. Dinesh construct this strategy or is he just a spectator? I hope he's not the one who's going to get bull-ied by the market.

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Lera

1 year ago

Hopefully Mr. Dinesh's strategy pays off in the end.

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Mollie

1 year ago

Let's see how the strategy plays out based on the closing price of Nifty.

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Angelica

1 year ago

He must have analyzed the market before making that decision.

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Carol

1 year ago

He constructed the BULL Call Spread Strategy with Nifty Call Options.

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Floyd

1 year ago

Aha, I think I've got it! Time to put on my options trading hat and solve this puzzle.

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Phuong

1 year ago

Actually, the correct answer is C) -115.05 and 84.95

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Lisbeth

1 year ago

No, I believe it's B) 64.95 and -135.05

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Desmond

1 year ago

I think the answer is A) 72.05 and -125.05

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Minna

1 year ago

Okay, let's see... 4100 Call at 170.45, 4400 Call at 35.40, and Nifty closing at different levels. *scratches head* This is where my calculator comes in handy.

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Mona

1 year ago

C) -115.05 and 84.95

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Wilson

1 year ago

B) 64.95 and -135.05

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Cristy

1 year ago

A) 72.05 and -125.05

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Tom

1 year ago

A BULL Call Spread, huh? Sounds like a bull is trying to spread its wings and fly, but the options prices might clip its wings.

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Narcisa

1 year ago

User 1

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Margery

1 year ago

User 2

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Blondell

1 year ago

User 1

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Benton

1 year ago

Hmm, this is a tricky one. I better brush up on my options trading strategies before tackling this question.

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Laurel

1 year ago

No, I believe it's B

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Kimi

1 year ago

B) 64.95 and -135.05

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Chantell

1 year ago

I think the answer is A

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Kirk

1 year ago

A) 72.05 and -125.05

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Dewitt

1 year ago

I'm not sure, but I think the answer might be B) 64.95 and -135.05. Can someone explain the rationale behind the calculation?

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Dino

1 year ago

I agree with Maryanne, because the net payoff for the BULL Call Spread Strategy is calculated by subtracting the total premium paid from the difference between the two strike prices.

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Maryanne

1 year ago

I think the answer is A) 72.05 and -125.05

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