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Answer: All of the above
All four statements are true: - **I** is true: a long call and a short call can be combined into bull spreads, bear spreads, calendar spreads, and diagonal spreads. - **II** is true: bull and bear spreads use options with the **same expiration date** but **different strike prices**. - **III** is true: a calendar spread uses options with the **same strike** but **different expirations**. - **IV** is true: a diagonal spread uses options with **different strikes** and **different expirations**. Therefore, the correct answer is **D. All of the above**.
Author: Manit Arora
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Q-184.7. With respect to option spread trade strategies, consider the following statements:
I. A long call option plus a short call option on the same stock can create the following trades: bull spread, bear spread, calendar spread, and diagonal spread
II. In the case of a bull or bear spread, the call options have the same expiration date but different strike prices
III. In the case of a calendar spread, the call options have the same strike price but different expiration dates
IV. In the case of a diagonal spread, the call options have both different strike prices and different expiration dates
Which of the above statements is (are) TRUE?
A
I. and IV. Only
B
II. and III. Only
C
II., III. and IV.
D
All of the above
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