Which of the following doesn't result in the closing of a long call option position?a.purchasing a put with the same expiration, strike, and underlying asset.b.letting the call go off-line.c.selling a call with the same underlying asset, strike price, and expiration.d.putting the call to use.
Question
Which of the following doesn't result in the closing of a long call option position?a.purchasing a put with the same expiration, strike, and underlying asset.b.letting the call go off-line.c.selling a call with the same underlying asset, strike price, and expiration.d.putting the call to use.
Solution
The option that doesn't result in the closing of a long call option position is b. letting the call go off-line.
Here's why:
a. Purchasing a put with the same expiration, strike, and underlying asset is known as a protective put strategy. This strategy is used when you are bullish on the market but want to protect against potential losses. This doesn't close the long call option but rather provides a safety net.
b. Letting the call go off-line simply means that you are not taking any action on the call option. This doesn't close the position; it just leaves it open until it expires.
c. Selling a call with the same underlying asset, strike price, and expiration is essentially closing the long call option position. You opened the position by buying the call, and you close it by selling the call.
d. Putting the call to use means exercising the option. This also closes the long call option position because once you exercise the option, the contract is fulfilled and the position is closed.
Similar Questions
.What is the difference between a call option and a put option?*1 pointa. A call option gives the holder the right to buy an underlying asset, while a put option gives the holder the right to sell an underlying asset.b. A call option gives the holder the right to sell an underlying asset, while a put option gives the holder the right to buy an underlying asset.c. A call option and a put option are the same thing.d. A call option and a put option have no relation to buying or selling an underlying asset
A covered call position is:Question 3Select one:a.the purchase of a share at the same time as selling a put on that share.b.the simultaneous purchase of a call and the underlying asset.c.selling a share short at the same time as selling a call on that share.d.the purchase of a share at the same time as selling a call on that share.Clear my choice
Which of the following statements is CORRECT?a.Put options give investors the right to buy a stock at a certain strike price before a specified date.b.Call options give investors the right to sell a stock at a certain strike price before a specified date.c.Options typically sell for less than their exercise value.d.An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.
Which of the following statement describes an option contract and the major distinction between a call and a put option?Group of answer choicesAn option is defined as the right, but not the obligation, to buy or to sell a specified amount of a given stock, commodity, currency, index or debt, at a specified price (the strike price) for a specified period of time.A put option contract gives a buyer the right not the obligation to sell an underlying security at certain price specified in the put option contract.All of the given answers.A call option contract gives a buyer the right not the obligation to purchase an underlying security at certain price specified in the call option contract.
A ________ option is an option to purchase a specified number of shares on or before some future date at a specified price, whereas a _______ option is an option to sell a specified number of shares on or before some future date at a specified price. ______ are bought if the share is expected to rise.Question 1Select one:a.put; call; Putsb.call; put; Putsc.call; put; Callsd.put; call; Calls
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.