Question: What is the most likely reason someone will write (sellf call options, on stock they bought, to collect relatively small revenue (option price) despite big

What is the most likely reason someone will write (sellf call options, on stock they bought, to collect relatively small revenue (option price) despite big risks? Exercise price is $100. They bought the stock for $75 and lock into a gain of $25 even if option is exersised. They short sold the stock for $125 and lock into a gain of $25 even if option is exercised. The are afraid the stock will go down They are greedy

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Question 18 4 pts What is the most likely reason someone will write (sell) call options to collect relatively small revenue (option premium) despite big risks? The writer thinks the stock will go up....

What is the most likely reason someone will write (sell) put options to collect relatively small revenue (option premium) despite big risks? Writer short sold the stock when the price was higher. The...

What is the most likely reason someone will write (sell) put options to collect relatively small revenue (option premium) despite big risks? Writer bought the stock when the price was low. The writer...

For the purposes of this question, you should make the following assumptions (except where noted in the questions below): all tables provided D = 0.2 (both for Media General and the media companies...

For the below, make the following assumptions (except where noted in the questions below): All tables provided. D = 0.2 (both for Media General and the media companies in Exhibit 12) The market...

1. A well-established, large, Indian-based MNE will probably be most adversely affected by which of the following elements of firm value? a. access to qualified labor pool b. an open marketplace c....

Evaluate the potential gains and losses for forwards,future,call options,put options and swaps. Outline and describe the different risks that each type of derivative contract faces. Describe...

4) Parktown Realty Inc developed an upscale condominium complex. On October 1, Miranda Wine signed an offer to purchase one of the units. Part of that document said, "This offer is irrevocable by the...

Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

I've attached the question as a word file, thanks! JWCL165_c10_444-505.qxd 8/12/09 7:24 AM Page 444 10 Liabilities Chapter STUDY OBJECTIVES After studying this chapter, you should be able to: 1...

The Sanger method for N-terminus determination is a less common alternative to the Edman degradation. In the Sanger method, the peptide is treated with the Sanger reagent, 2, 4-dinitrofluorobenzene,...

Referring to Exhibit 1-6, which geographic region of the world, the Americas, Asia-Pacific, or Europe-Africa-Middle East is experiencing the most activity in foreign listings?

David McDowell co establishes a $ 1 1 2 , 0 0 0 , 0 0 0 liability at the end of 2 0 2 0 for estimated site - cleanup costs at two of its manufacturing facilities. All related closing costs will be...

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...