Worksheet:

Your Turn
Section 7: Call Backspread

General Electric Co. (GE) has been falling precipitously

over the previous 52 weeks. You are not sure when the
stock will recover, but feel it is worth the wager since you
like the risk/reward set up. You feel the stock could
continue to fall OR surprise the market with a very large
upside move. The structure you choose is a call
backspread for a credit.
 Call Backspread
Stock: GE
Date: 4/6/18
Stock Price: 13.06

Sell 1 GE JUN 13 Call at .86

Buy 2 GE JUN 15 Calls for .25

Max Profit Unlimited

Fo r m u l a s

Max Loss (Long Call Strike - Short Call Strike +/-

Net Premium Paid/ Received) X 100
Breakeven Higher (2X Long Call Strike - Short Call Strike)
+/- (Net Premium Paid/ Received)

Breakeven  Lower Short Call Strike +/- Net Premium Paid/

Received
Calculate the Formulas

Max Loss

Max Gain

Breakeven Higher

Breakeven Lower

GE Price at
Expiry

Net Result