If You Were to Purchase an October Option with an Exercise

question 95

Multiple Choice

If you were to purchase an October option with an exercise price of 50 for $8 and simultaneously sell an October option with an exercise price of 60 for $2, you would be

• A) bullish and taking a high risk.
• B) bullish and conservative.
• C) bearish and taking a high risk.
• D) bearish and conservative.
• E) neutral.

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Definitions:

Structure and Definition

The organization and explanation of the components that make up a concept, system, or entity, detailing how they interrelate.

Takeover

The acquisition of one company by another, where the acquiring company assumes control over the target company.

Hostile Transaction

Typically refers to a takeover attempt by a company or individual that is strongly opposed by the target company's management or board of directors.

Merger

The combination of two or more companies into a single entity, typically to achieve greater efficiencies and strengthen market position.