Buyers of listed options ________ required to post margins, and writers of naked listed options ________ required to post margins.
A) are; are not
B) are; are
C) are not; are
D) are not; are not

Question

Buyers of listed options ________ required to post margins, and writers of naked listed options ________ required to post margins.
A) are; are not
B) are; are
C) are not; are
D) are not; are not

Quizplus · Accepted Answer

Buyers of listed options are not required to post margins because they have limited risk, which is the premium paid for the option. On the other hand, writers of naked listed options (options not backed by an offsetting position) are required to post margins because they have unlimited risk. The margin requirement ensures that the writer has enough funds to cover potential losses.

Buyers of Listed Options ________ Required to Post Margins, and Writers