2: Explain carefully the difference between selling a call option and buying a put option. Explain it properly

Q: When I buy an option, I gain rights, but I also have obligations to the option seller. True Or…

A: Options are important financial derivatives widely used in financial markets.

Q: The majority of the time, once a put option is purchased it is either sold for a gain or expires…

A: Options are derivative instruments in which the buyer of the option has the right or obligation to…

Q: Explain how the possible profit and loss possibilities arise for an individual who invests in a:…

A: Call options are financial derivative instrument which gives the buyer of the contract the right but…

Q: option

A: Call options are those options which gives the right but not the obligation to the buyer to purchase…

Q: Which of the following statements is CORRECT?   Group of answer choices   Call options generally…

A: Call option is the financial contract which gives right and not obligation to buy the goods at…

Q: ue/ False There is a possibility of unlimited loss to put option buye

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: 3 What is the intrinsic value of an CALL option?

A: Intrinsic value of a call option is the difference between the market price of the underlying stock…

Q: TRUE OR FALSE - brief explanation  As a call option is an option to buy and a put option an option…

A:

Q: options contracts

A: An option contract illustrates a two-party agreement that authorises a transaction on a certain…

Q: Which of the following best describes the intrinsic value of an option?     The…

A: Intrinsic Value of an Option: Intrinsic value can be described as a measure of the worth of an…

Q: Which of the following is NOT true of options? I. The writer decides whether the option will be…

A: Call option gives holder a right to buy a stock, but it is not an obligation to buy the stock.…

Q: Explain how the possible profit and loss possibilities arise for an individual who invests in a: a.…

A: (a)(i)The stock option may be of two types: a call option and a put option. Call option gives a…

Q: What is the primary distinction between exchange-listed and over-the-counter options? Which option…

A: There are various uncertain future factors which can create the risk in coming time, to avoid or…

Q: With reference to the Black Scholes model, explain the concept of risk neutral valuation. Outline…

A: Risk-neutral valuation : Valuation that is risk-free. When valuing derivatives like stock options,…

Q: 1. (a) Describe the defining features of call and put options and explain intuitively using an…

A: Derivatives: Derivatives are a class of securities that derive their values based on another asset…

Q: fill the missing words: a. For  (  ) options, when the spot price is (  ) than(or equal to)the…

A: Options are versatile financial products. These contracts involve buyers and sellers, who pay a…

Q: indicate whether an increase in its value causes the value of the put option to increase or to…

A: An agreement where the holder has a right to purchase or sell the shares at a specific price at a…

Q: The future worth of option D is $ The future worth of option E is $ Option (Click to select) v is…

A: Future worth is the amount that an investor expects from the cash flows in each period. Future worth…

Q: When assigning an option to another investor, how much is a typical assignment fee?

A: Assignment fee is basically the terms in which the investor will be paid upon assigning the…

Q: What is the role played by the clearinghouse if you are seller of a put option

A: Clearing house is intermediary between buyers and sellers which collect payment from both sides and…

Q: Why must real options have positive​ value? ​(Select all the choices that​ apply.)     A. Having the…

A: Real options might have positive worth for the reason that they are only work out if doing so would…

Q: What impact does each of the followingparameters have on the value of a call option?(2) Strike price

A: A call option is a derivative instrument and thus,  it derives its value from some underlying asset.…

Q: The majority of the time, once a call option is purchased it is either sold for a gain or expires…

A: Call option holder has a right to buy a particular stock at expiry date at a strike price or lapse…

Q: 4 Who is more likely to profit from an option contract, the writer or the buyer?

A: A contract between the financial asset's seller and buyer, which allows the buyer to sell or buy the…

Q: Discuss which of the following statements is true.   I. An American call option is cheaper than a…

A: American call can be exercised before expiration also but European call can not be exercised before…

Q: What is the payoff to call option buyer and seller?

A: Call option A call option is referred to as the financial contract which provides its holder an…

Q: is payoff to call option buyer or h

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…

Q: ich of the following inputs is not required to price option using the Black‐Scholes model?  a) the…

A: Introduction: The Black-Scholes model is a differential equation used in financial theory. The…

Q: Determine, generally based on justification, in what manner does seller a put option set targeted?

A: Put options offer option holders the right, but not really the responsibility, to sell a…

Q: i) Differentiate between “in the money”, “out the money” and “at the money” positions in a put…

A: Put option A put option is said because the contract which provides the holders or the owner the…

Q: CBOE option market makers are also called liquidity providers. True or False?

A: CBOE stands for the Chicago Board Options Exchange.

Q: The Monte Carlo method for pricing options is often referred to as a method of last resort. Explain…

A: Monte Carlo Simulation: It is a method that is used to model the probability of different outcomes…