When You Purchase a Put Option While Still Holding the Underlying

question 2

Multiple Choice

When you purchase a put option while still holding the underlying share, it is known as a

• A)speculative put.
• B)speculative call.
• C)protective call.
• D)protective put.

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Definitions:

Marginal Revenue

Marginal revenue is the additional income received from selling one more unit of a good or service, crucial for determining the optimal production level and pricing strategies for businesses.

Perfectly Competitive

A market structure characterized by a large number of buyers and sellers, homogenous products, and easy entry and exit from the market.

Price Takers

Entities that have no power to influence the market price of the product they are selling or buying; they accept the prevailing market price.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.