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I just want to know for a question like this, how do we know if they're asking for a short call or a long call?
I just want to know for a question like this, how do we know if they're asking for a short call or a long call? or a short put or a long put? If they don't tell me in the question, like in this example, how should I know that it is a short or long call? or a short or long put? Please explain with as much detail as possible. Please explain in simple terms too!!
Part II: Problems (25 Points Total) - Answer on this document, in the space provided. Use the back of the sheet if you need additional space. Any work not labeled clearly will not be graded. - Show all your work. Unsupported statements or numbers will not receive any grade. Q1: Option portfolio payoff: Suppose that the price of a share of stock in ABC Corporation is currently trading at $30 /share. Consider selling the following two options on one share of ABC : a. A Call option with a strike price of $35 b. A Put option with a strike price of $25 (i): (4 points) Draw a payoff diagram of this portfolio. Note: Clearly label both axes as well as the location of each important point on the diagram. Show which portion of the payoff is a result of which corresponding optionStep by Step Solution
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