The Writer of a Put Option Hopes That the Price

question 81

Multiple Choice

The writer of a put option hopes that the price of the underlying stock will rise because

• A) the option is more likely to be exercised.
• B) the option is less likely to be exercised.
• C) the buyer of the put will have to purchase the stock at a higher price.
• D) the value of the put option will increase in the secondary market.

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Definitions:

Absolute Value Inequality

An inequality that involves the absolute value of a variable expression, which represents a range of solutions.

Solution

The value or values that satisfy an equation, inequality, system of equations, or other mathematical condition.

Absolute Value Inequality

An inequality that involves the absolute value of a variable expression.

Interval

A range of values between two numbers, often used in mathematics to specify a subset of the real number line.