Which of the following assumes higher stock prices?
1. buying a stock index call
2. buying a stock index put
3. selling a stock index call
4. selling a stock index put
A)1 and 3
B)1 and 4
C)2 and 3
D)2 and 4

Question

Quizplus · Accepted Answer

1 and 4. Buying a stock index call option assumes that stock prices will rise, as the buyer profits from an increase in the underlying index. Selling a stock index put option also assumes higher stock prices, as the seller benefits if the index stays above the put's strike price, making the put option worthless or less valuable.

Which of the Following Assumes Higher Stock Prices