Question
1. Please answer the following questions briefly. a) Explain why margin accounts are required when clients write options but not when they buy options. b)
1. Please answer the following questions briefly.
a) Explain why margin accounts are required when clients write options but not when they buy options.
b) Employee stock options issued by a company are different from regular exchange-traded call options on the companys stock because they can affect the capital structure of the company. Explain this statement.
c) Explain why an American option is always worth at least as much as a European option on the same asset with the same strike price and exercise date.
d) Explain why an American option is always worth at least as much as its intrinsic value.
e) Explain carefully the difference between writing a put option and buying a call option.
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