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Statement is TRUE
Explanation : Call shorter will suffer losses if the share price increases and theoritically it can increase to infinite level. Therefore statement is TRUE.
Question 2 (1 point) Saved The potential loss for writing a short (or naked) call option...
Question 1 (1 point) The maximum loss for writing a put option is infinity. True False
The potential gain for a holder of a naked call option on a stock is _________. Multiple Choice equal to the strike price plus the premium larger with a higher strike price unlimited larger with a higher stock price
Home Task - Chapter 11. Long and Short Options Questions 1. Which is more profitable: to sell (sell-to-close) or exercise a long option before expiration? 2. Would a long option, which expired "in-the-money" be automatically exercised? 3. What is the highest potential gain/loss for a long call? 4. What is the highest potential gain/loss for a long put? 5. What is the difference between a naked call and a short call? 6. What is the difference between writing an option...
The potential gain for a holder of a naked call option on a stock is _________. Multiple Choice equal to the strike price plus the premium Incorrect larger with a higher strike price unlimited larger with a higher stock price A put option on Brocklehurst Corp. has an exercise price of $30. The current stock price of Brocklehurst Corp. is $32. The put option is _________. Multiple Choice at the money in the money Incorrect out of the money Not...
Although the potential loss incurred from purchasing a call option is finite, the potential loss to the seller is unbounded. Explain why the potential loss that the seller may incur is unbounded.
Q2. The maximum loss from writing a call option is limited but the maximum gain is not. 2 points Your answer
1. The profit for a short position in a call option is always negative or zero. (a) True (b) False
One advantage associated with selling (i.e., writing) a call option includes a. potential leverage. b. income from collecting dividends. c. income from the sale of the option. d. increased potential for capital gains.
• Profit/loss for buyers/sellers of call option/put option Breakeven for call option/put option An investor bought 1 XYZ March 30 call for 3. o What is the breakeven point? 3043-33 o What is the initial investment of this strategy? 300 o What is the profit/loss if XYZ trades for 25 at expiration? o What is the profit/loss if XYZ trades for 35 at expiration? o What is the max. profit? P *LP o What is the max. loss? Premium
questions 25-28 please 25. You buy a call option on Boeing Corp with an exercise price of $40 and an expiration date in September, and you write a call option on Boeing Corp with an exercise price of $40 and an expiration date in October. This strategy is called a A. Time spread B. Long straddle C. Short straddle D. Money spread E. None of the above 26. The maximum loss a buyer of a stock's call option can suffer...