Buying and Selling a Call Option on the Same Stock

question 8

Multiple Choice

Buying and selling a call option on the same stock with the same strike price and expiration date is a

• A) strip.
• B) straddle.
• C) spread.
• D) split.

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Definitions:

Maturity

Maturity indicates the date on which the principal amount of a financial instrument is due to be paid back.

Buyback Price

Buyback price is the price at which a company agrees to repurchase its own shares from shareholders, often as part of a share repurchase program.

Quality Ratings

Assessments of the creditworthiness or quality of corporations and government bonds, often provided by credit rating agencies.

Required Rates

The minimum returns demanded by investors or lenders to compensate for the risk of an investment or loan.