You own an October 12 call and an October 12 put on SC stock.If the call finishes in the money,then the put will

Question

Quizplus · Accepted Answer

If the call finishes in the money, the put option will finish out of the money because they have opposite positions. The call option gives the holder the right to buy the underlying asset at a specified price (strike price) and the put option gives the holder the right to sell the underlying asset at a specified price. If the stock price rises, the call option will be more valuable, but the put option will be less valuable, as the holder does not want to sell the stock at a lower price than the market price. Thus, the put option will finish out of the money.

You Own an October 12 Call and an October 12