Although the Payouts on a Long Position in an Options

question 2

True/False

Although the payouts on a long position in an options contract are never negative, the profit from purchasing and holding it could be negative.

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Definitions:

Supply and Demand

Economic model describing how prices vary as a result of a balance between product availability and the desire of consumers.

Federal Reserve

The central banking system of the United States, responsible for setting monetary policy, regulating banks, and providing financial services to the government.

Non-Amortized Debt

A loan in which the principal amount borrowed does not decrease through regular payments over the term of the loan.

Principal

The original sum of money borrowed in a loan or the initial amount of investment, excluding any interest or growth.