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A call option holder has an obligation to sell the asset. True or false?
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- When I buy an option, I gain rights, but I also have obligations to the option seller. True Or False?The seller of a put option is not necessarily the seller of the underlying asset. True FalseThe seller (or the writer) of a call option: may have the obligation to sell the underlying asset at a strike price until an expiration date may have the obligation to buy the underlying asset at a strike price until an expiration date has the right to sell the underlying asset at a strike price until an expiration date has the right to buy the underlying asset at a strike price until an expiration date None of these answers are correct.
- For a call option, the: * A. buyer is locked into receive the underlying asset at a specified time. B. writer is committed to handing over the specified asset if the holder of the call exercises the option. C. writer may choose whether or not to deliver the underlying asset at a specified time. D. buyer will choose to exercise the option only if the price of the underlying asset fallsA call option: Choose the right answer: a. is the right to buy at the strike price on or before a certain date. b. is the option to sell at the strike price on or before a certain date. c. requires the holder to buy the asset. d. requires the holder to sell the asset.An option to buy the asset is referred to as a _______, while an asset to sell the asset is called a _______. Group of answer choices B. Put, Call D. Call, Short A. Short, Put C. Call, Put
- The potential loss incurred from purchasing a call option is finite, but the potential loss to the seller is unbounded. Explain why the potential loss that the seller may occur is unbouned.As a call option is an option to buy and a put option an option to sell, the opposite position to buying an option to buy is buying an option to sell. Therefore, any factor that increases the value of a call option will decrease the value of a put option written on the same asset. Identify whether it is TRUE or FALSE. Why? Give an explanation.Which of the following best describes an option contract? a. It gives the holder the obligation to buy or sell an underlying asset at a prespecified price for a specified time period. b. It gives the holder the right, but not the obligation, to buy or sell an underlying asset at a prespecified price for an unspecified time period. c. It gives the holder the right, but not the obligation, to buy or sell an underlying asset at a prespecified price for a specified time period. d. It gives the holder the right, but not the obligation, to buy or sell an underlying asset at an unspecified price for an unspecified time period.
- Choose which sentance is false. A. When you own a call option, you have the right to buy the asset. B. A option contract gives the writer the right, but not the obligation, to buy or sell a particular asset on or before a specifice date in the furture at a specific price. C. When you own a put option, you have the right to sell the asset. D. When you own a stock option, you have right, but not the obligation, to buy or sell a share of stock on or before a given date for a given price.If instead of an unguaranteed residual value, there is a purchase option which is so low that it is expected Lessee will exercise it then Lessee adds the present value of the option as an additional payment to be made, but Lessor does not add it into the receivable. Both parties add in the present value of the option to the liability or receivable. Lessor adds the present value of the option as an additional payment to be received, but Lessee does not add it into the liability. Neither party considers the present value of the option for the liability or receivable.The price that the buyer of a call option pays for the underlying asset if she executes her option is called the A. premium B. exercise price C. execution price D. calling price