Question
The position that is the opposite of a purchased call is a written call. A seller of a call option is said to be the
The position that is the opposite of a purchased call is a written call. A seller of a call option is said to be the option writer, or to have a short position. The call option writer is the counterparty to the option buyer, and his payoffs and prots are just the opposite of those of the call option buyer. \ Similarly, the position that is the opposite of a purchased put option is a written put option. Again, the payoff and prot for a written put are just the opposite of those of the purchased put. \ It is important to note that the opposite of a purchased call is NOT the purchased put. If you do not see why, please draw a payoff diagram with a purchased call and a purchased put.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started