Question: a) Explain why an organised options exchange needs a clearing house? b) Explain how a trader can close his position in an option contract (consider

a) Explain why an organised options exchange needs a clearing house?

b) Explain how a trader can close his position in an option contract (consider both, long and short position).

c) Explain the possible benefits and obligations a buyer of a long Call option can have.

d) Explain the possible benefits and obligations a seller of a short Put option can have.

e) Consider the following information. A trader buys a Call option for 5 that gives the right to purchase a share stock for 100. In this situation identify: the exercise price, the premium and the striking price.

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