Question: 5 Think about the risk profile for the 4 basic option positions. Long Call Position Long Put Position Option Payoff Option Payoff lerlying Option $

5 Think about the risk profile for the 4 basic option positions. Long Call Position Long Put Position Option Payoff Option Payoff lerlying Option $ 120 Underlying $ 105 Option Premium Price Premium Price Short Call Position Short Put Position Option Payoff Option Underlying Price Option Payoff Option Premium 4 Premium $ 120 $ 105 Underlying Price Option Pricing Factors 1. How does option value move in relation to underlying price? . For a put option, the value goes up when the underlying price goes down: the holder can sell at price K something which is valued less than K. . For a call, the opposite is true

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