Question: Answer this question based on the following three statements: 1. An investor who bought the underlying stock and simultaneously sold a call option on it
Answer this question based on the following three statements: 1. An investor who bought the underlying stock and simultaneously sold a call option on it would clearly profit if the stock price increased sharply. 2. The value of a call increases when the time to expiration increases, the risk-free rate of return decreases, and the dividend for the underlying assets decreases. 3. Call option writer can earn, at most, the premium of the option. O a. Only 3 is correct. O b. Only 1 and 2 are correct. O c. Only 2 and 3 are correct. O d. Only 2 is correct. e. Only 1 is correct
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
