In Order to Closeout an Unprofitable Position on a Short

question 117

Multiple Choice

In order to closeout an unprofitable position on a short put, the option trader would:

• A)buy puts with the same expiry date and exercise price
• B)sell puts with the same expiry date and exercise price
• C)buy calls with the same expiry date and exercise price
• D)sell calls with the same expiry date and exercise price.
• E)Short option positions must be maintained until expiry.

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Definitions:

Divisional Investment

Refers to the financial capital allocated to a specific division within a company to fund operations, projects, or asset acquisitions.

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, comparing the gain from an investment relative to its cost.

Income From Operations

The earnings generated from a company's regular business activities, excluding revenues and expenses from non-operational sources.

Residual Income

The amount of income that exceeds the minimum rate of return expected by a company or investor.