1. Writing a naked call option, compared to a covered call, results in which of the following?

a. Greater maximum loss if the option expires out-of-the-money

b. Greater maximum loss if the option expires in-the-money

c. Narrower distribution of the profit / loss

2. Theoretically, according to Black-Scholes model, when hedging a short position in an option, the hedge portfolio should be rebalanced how often?

a. Once a day

b. Once an hour

c. Once a minute

d. Continuously

3. When hedging a short position in an option with the shares of the underlying stock, the hedge portfolio needs to be rebalanced because:

a. Option price changes with the stock price

b. Option delta changes with the stock price