2 Puts vs. Calls (10 points) If you buy a call option or sell (write) a...

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2 Puts vs. Calls (10 points) If you buy a call option or sell (write) a put option, in both cases you may end up paying the strike price and receiving the asset. However, when you buy a call, you pay up front, whereas if you sell a put, you get paid up front. Briefly (three sentences maximum) explain why there is this difference in upfront payment. (This is not a trick question. It is very easy, but also fundamental.) 2 Puts vs. Calls (10 points) If you buy a call option or sell (write) a put option, in both cases you may end up paying the strike price and receiving the asset. However, when you buy a call, you pay up front, whereas if you sell a put, you get paid up front. Briefly (three sentences maximum) explain why there is this difference in upfront payment. (This is not a trick question. It is very easy, but also fundamental.)

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