Question

Which of the following is the riskiest single-option position?

(a) long the call.

(b) long the put.

(c) short the call.

(d) short the put.

(v) An investor will make a net profit from a call option when the price of the stock is:

(a) above the strike price.
(b) below the strike price plus the premium.

(c) above the strike price plus the premium.

(d) at the strike.

Answer 1

1.Explanation

Riskiest single-option position is short the call .The biggest risk in short the call is it is the potential for infinite loss,if the stock price goes to 0 then it is 100% loss

So option c is correct.

2.Call option -Grants the right to buy the underlying asset by a particular date for a strike price.

An investor makes a net profit from a call option when the price of the stock is above the strke price plus the premium.

So option c is correct.