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:

Polluters

Entities, often companies or individuals, that release pollutants into the environment, causing harm or potential harm.

External Benefits

Benefits of a good or service that are enjoyed by people other than the ones who originally purchase or consume the good.

Marginal Social Cost

The complete expense incurred by society to produce an extra unit of a product, incorporating both individual costs and external effects.

Marginal Social Benefit

The additional benefit to society as a whole from producing one extra unit of a good or service.