Which of the following investors would be happy to see the stock price rise sharply?
I.An investor who owns the stock and a put option;
II.An investor who has sold a put option and bought a call option;
III.An investor who owns the stock and has sold a call option;
IV.An investor who has sold a call option
A)I and II only
B)III and IV only
C)III only
D)IV only

Question

Quizplus · Accepted Answer

An investor who owns the stock and a put option (I) benefits from the stock price rising because they own the stock. An investor who has sold a put option and bought a call option (II) benefits from a rise in stock price because the call option gains value and the put option they sold becomes less likely to be exercised.

Which of the Following Investors Would Be Happy to See