It Is May 19^th and You Own a June,European Call

question 10

Multiple Choice

It is May 19^th and you own a June,European call on ABC Corp.with an exercise price of $50.The option trades at $40 and ABC is trading at $86.What should you do?

• A) Exercise the option now and take the profits.
• B) Buy more options on ABC Corp.
• C) Sell your ABC stock before its price declines.
• D) Sit and wait until the June expiration.

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Definitions:

Hard-sell Approach

A sales strategy that uses aggressive tactics and pressure to convince customers to buy a product or service.

Potential Problems

Issues or challenges that may arise in the future or under certain conditions.

Inductive Reasoning

A logical process in which multiple premises, all believed true or found true most of the time, are combined to obtain a specific conclusion.

Generalization

A broad statement or concept obtained by inference from specific cases.