An Investor Purchased a Call Option and Wrote a Put

question 14

Multiple Choice

An investor purchased a call option and wrote a put option at an exercise price lower than that of the long call option.The strategy is known as a:

• A) long straddle.
• B) horizontal bull spread.
• C) vertical bull spread.
• D) short straddle.

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Definitions:

Financial Ruin

A state of having lost a significant portion or all of one’s financial resources or assets, often leading to insolvency.

Trust

The confident belief in the reliability, truth, ability, or strength of someone or something, forming the foundation of relationships in social and business contexts.

Sustainability

The practice of conducting business in a manner that does not compromise the ability of future generations to meet their needs, emphasizing environmental protection, social equity, and economic health.

Social Entrepreneurship

A practice of starting companies and other organizations to develop, fund, and implement solutions to social, cultural, or environmental issues.