Which of the Following Best Reflects the Exposure Position of a Writer

question 89

Multiple Choice

Which of the following best reflects the exposure position of a writer of a put option?

• A) A loss is made when the spot price is below the exercise price adjusted by the premium.
• B) The extent of the loss potential is limited to a zero spot price less the premium paid.
• C) The maximum profit to the writer is limited to the extent of the premium paid.
• D) All of the given answers.

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Definitions:

Share Price

The current price at which a single share of a company's stock can be bought or sold in the market.

Early-stage Financing

Capital provided to young companies or startups to help them grow and scale their operations, typically through venture capital.

Revenue

The income gained from sales of goods or services.

Funds

Financial resources set aside for a specific purpose or project.