Question

2) Discuss how a long call position in a particular stock would differ from a short...

2) Discuss how a long call position in a particular stock would
differ from a short put position in the same stock with the same
strike price and the same expiration date.

2a) Explain why a call option on a specific stock with a specific
strike price and expiration date might be worth much more than
another call option on a different stock having the same stock
price, the same option strike price, and the same expiration date.

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Homework Answers

Answer #1

2.long call option is betting on the upside by buying of the call option which will be providing with the right to the option holder to buy a particular number of security before the maturity date and it is always a right not an obligation.

Selling a put option is also meaning that the investor is betting on the upside but he is selling the option to gain a premium and his risk is unlimited in nature and he is also obligated to exercise that contract before maturity

2a. Call options value can be different because of the volatility and beta of the stock along with the past performance of the stock and well as the investors behaviour.

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