An Option Buyer

question 13

Multiple Choice

An option buyer:

• A) has a greater insurance benefit than the purchaser of a futures contract.
• B) will generally incur a lower cost compared to a purchaser of a futures contract.
• C) is purchasing a very risky instrument if they don't own the underlying asset as they are locked in to buying at expiration.
• D) carries the risk of unfavourable price movements.

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Definitions:

Performance Standards

Benchmarks or criteria established to measure the efficiency, productivity, or quality of an individual's or organization's work output.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.

Arbitrary

Decisions or actions not based on a system, principle, or rule and often appearing random or subject to individual will without restriction.

Future-Oriented

A perspective or approach that focuses on planning, forecasting, and preparing for upcoming changes, challenges, and opportunities.