You speculated stock price of Cino. Co. will move toward a certain direction and decided to taken an option position of this stock to make profit. For that position, if the stock's price drops you will get a level gain no matter how huge prices decrease. However, you could go bankrupt if the stock's price rises. What is your option position?

Question

Quizplus · Accepted Answer

Writing a call option (selling a call) means you receive a premium upfront, but if the stock price rises, you could face unlimited losses, potentially leading to bankruptcy. If the stock price drops, you keep the premium, resulting in a level gain.

You Speculated Stock Price of Cino