An August CDD Weather Option Is Offered on the Cumulative

Multiple Choice

An August CDD weather option is offered on the cumulative monthly CDD at an Atlanta weather station. An investor has a long call with a strike price of 375 and a short call with a strike price of 400. The payment is $10,000 per degree day. What is the maximum payoff?

A) $500,000
B) $250,000
C) $100,000
D) $50,000