Jillian owns an option which gives her the right to purchase shares of WAN at a price of €20 a share.Currently, WAN equity is selling for €24.50.Jillian would like to proﬁt on this share but is not
Permitted to exercise her option for another two weeks.Which of the following statements apply to
This situation?
I.Jillian must own a European call option.
II.Jillian must own an American put option.
III.Jillian should sell her option today if she feels the price of WAN will decline signiﬁcantly over the
Next two week.
IV.Jillian cannot proﬁt today from the price increase in WAN.

Question

Quizplus · Accepted Answer

Jillian must own a European call option because she cannot exercise it until a specific date (two weeks later). She cannot profit today from the price increase because she cannot exercise the option yet.

Jillian Owns an Option Which Gives Her the Right to Purchase