The writer of a naked call option wants
A)the prices of the stock and the call to rise
B)the prices of the stock and the call to fall
C)the prices of the stock to fall and the call to rise
D)the prices of the stock to rise and the call to remain stable

Question

The writer of a naked call option wants
A)the prices of the stock and the call to rise
B)the prices of the stock and the call to fall
C)the prices of the stock to fall and the call to rise
D)the prices of the stock to rise and the call to remain stable

Quizplus · Accepted Answer

The writer of a naked call option benefits when the price of the underlying stock falls or remains below the strike price of the call option, as this makes the option less likely to be exercised, allowing the writer to keep the premium received without having to deliver the stock.

The Writer of a Naked Call Option Wants