How Can Options Be Used to Synthesise a Short Position

question 187

Multiple Choice

How can options be used to synthesise a short position in the underlying commodity?

• A) A short put option + long call option at the same
• B) A long put option + short call option at the same
• C) A short put option + short call option at the same
• D) A long put option + long call option at the same s

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Definitions:

Sell

The act of giving or handing over something in exchange for money.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors are valid.

Sunk Cost

A past cost that has already been incurred and cannot be recovered, which should not influence future financial or business decisions.