Identify the correct statement related to the choice of exercise price for buying a call.
a. the higher the exercise price the higher the call premium
b. the lower the exercise price the more likely the call option will expire out-of-the-money
c. A higher strike price results in smaller gains on the upside but smaller losses on the downside
d. the higher the exercise price the more dividends contribute to the overall profit
e. none of the above are correct statements related to the choice of exercise price for buying a call
Answer: C
Learn More :
Basic Option Strategies
- A synthetic short put position can be created with which of the following sets of transactions.
- A synthetic long call position can be created with which of the following sets of transactions.
- Which of the following statements about a covered call writing strategy is true?
- Which of the following investors may be obligated to buy stock?
- The difference in profit from an actual put and a synthetic put is
- Which of the following is the breakeven for a protective put?
- Which of the following strategies has essentially the same profit diagram as a covered call?
- Which of the following strategies has the greatest potential loss?
- Each of the following is a bullish strategy except
- Early exercise imposes a risk to all but one of the following transactions.
- Which of the following is equivalent to a synthetic call?
- Which of the following transactions does not profit in a strong bull market.
- Which of the following statements is true about closing a long call position prior to expiration relative to holding it to expiration?
- Consider two put options differing only by exercise price. The one with the higher exercise price has
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.