Figure 1 depicts the
A)position diagram for the buyer of a call option.
B)profit diagram for the buyer of a call option.
C)position diagram for the buyer of a put option.
D)profit diagram for the buyer of a put option.

Question

Figure 1 depicts the 
A)position diagram for the buyer of a call option. 
B)profit diagram for the buyer of a call option. 
C)position diagram for the buyer of a put option. 
D)profit diagram for the buyer of a put option.

Quizplus · Accepted Answer

The graph shows increasing profit as the underlying asset price increases, which is characteristic of a call option. The flat line represents the maximum potential loss, which is the premium paid for the option. Therefore, this is a profit diagram for the buyer of a call option.

Figure 1 Depicts the