Question

10.Unlike a covered call writer, a naked call writer will always lose if

a.         the stock price rises by more than the option premium

b.         the stock price declines by more than the option premium

c.         a closing transaction is executed

d.         none of the above

16.Which of the following is equivalent to a synthetic call?

a.         a long stock and a short put position

b.         a long put and a long stock position

c.         a long put and a short risk free bond position

d.         a long stock and a short risk free bond position

e.         none of the above

17.Which of the following strategies has essentially the same profit diagram as a covered call?

a.         a long put

b.         a short put

c.         a long call

d.         a short stock

e.         none of the above

Answer 1

10. Unlike a covered call writer, a naked call writer will always lose if

b.         the stock price declines by more than the option premium

16.Which of the following is equivalent to a synthetic call?

d.         a long stock and a short risk free bond position.

17.Which of the following strategies has essentially the same profit diagram as a covered call?

a.         a long put