o o If the current stock price is $55, and you're looking at a $60 call option for the next month, what does it mean if the contract price is $0.75? O A lot of people expect the price to have a massive breakout soon A lot of people expect the price to drop drastically Most people expect the price to stay below $60 O Most people expect the price to not move at all Which of the following functions of an option price is not easily agreed upon by traders? O Stock price O Volatility Strike price Days to expiration o What is a covered call? When you own the underlying stock and write the call, When you buy the right, but not the obligation to buy an option contract, O When you buy the right but not the obligation to sell an option contract. O When you do not own the underlying stock and write the call What happens on the expiration date of an option contract? O The option automatically renews O The option goes down in value O The option is worthless if not exercised already O Investors receive the face value of the coupon What factor makes it easier for the sellers or writers of options to "win"? The usually are more knowledgeable about how the stock market works They own the underlying security O Each day that goes by the odds of a price movement become less and less o Implied volatility is usually on the seller's side If an option contract is trading at $5.45, what is the premium? $5.45 o $45 0 $545 0 $450 For investors, what does high volatility usually signify? O Risk and uncertainty o Implied volatility O Prices are going up O Prices are going down True or False - High implied volatility affects the seller more than the buyer? O False O True The Black-Scholes model helply option traders in what major way? o It calculates the correct strike price olt calculates the annual rate of return It calculates the implied volatility o It calculates the expected price of the option at expiration date investors are huving calls than puts