A naked call option writer
1) profits if stock prices rise
2) profits if stock prices fall
3) owns the underlying stock
4)does not own the underlying stock
A)1 and 3
B)1 and 4
C)2 and 3
D)2 and 4

Question

A naked call option writer​
1) profits if stock prices rise
2) profits if stock prices fall
3) owns the underlying stock
4)does not own the underlying stock
A)1 and 3
B)1 and 4​
C)​2 and 3
D)2​ and 4

Quizplus · Accepted Answer

A naked call option writer does not own the underlying stock, therefore option 3 is incorrect. The naked call option writer profits if stock prices fall, so option 2 is also incorrect. The only correct options are 1) profits if stock prices rise and 4) does not own the underlying stock, so the answer is D.

A Naked Call Option Writer​

A Naked Call Option Writer