Which of the following is true regarding the options markets?
A) Hedgers and speculators both attempt to lower risk.
B) Hedgers attempt to lower risk, while speculators attempt to make riskless profits.
C) Hedgers and speculators are both necessary in order for the market to be liquid.
D) all of the above

Question

Quizplus · Accepted Answer

Options markets require both hedgers and speculators in order to be liquid. Hedgers use options to reduce risk, while speculators provide liquidity by taking the opposite side of trades. Neither group is attempting to make riskless profits, as options inherently involve risk.

Which of the Following Is True Regarding the Options Markets