Options Can Be Used for Speculation

question 83

Multiple Choice

Options can be used for speculation. If you believe that the spot price of T-bills is going to be much higher by next June, which of the following would be the best way to act on this belief? For simplicity, assume that the strike price and the spot price are about equal.

• A)You could sell a put option
• B)You could buy a put option.
• C)You could buy a call option.
• D)You could sell a call option.

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Definitions:

Ownership

The state or fact of exclusive rights and control over property, which can be an object, land/real state, intellectual property, or something else.

Quitclaim Deed

A deed that carries no warranties. The grantor simply conveys whatever interests he or she holds.

General Warranty Deed

A deed containing a covenant in which the seller agrees to protect the buyer against being dispossessed because of any adverse claim against the land.

Quitclaim Deed

A legal document transferring a person's interest in real property without guaranteeing its clear title.