A Three-Month At-The-Money Call Option on a Stock Is Trading

question 20

Multiple Choice

A three-month at-the-money call option on a stock is trading at $5;the stock is trading at $50.A forward start option that comes to life in one month and has a life of three months from that point and that will be at-the-money when it comes to life is trading at $4.98.You hold a portfolio that is long the three-month call and short the forward start.The gamma of the portfolio is

• A)Positive
• B)Zero
• C)Negative
• D)Can be positive,zero,or negative.

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Definitions:

Procedural Memory

A type of long-term memory that involves the unconscious memory of how to perform tasks, skills, or actions.

Implicit Memory

Unconscious retention in memory, as evidenced by the effect of a previous experience or previously encountered information on current thoughts or actions.

Semantic Memory

A type of long-term memory involving the capacity to recall words, concepts, or numbers, which is essential for the understanding and use of language.

Explicit Memory

Conscious, intentional recollection of an event or of an item of information.