A buyer of the call option is NOT speculating on the
A) direction of the price movement of the underlying investment.
B) timing of the price movement of the underlying investment.
C) leverage that a call option creates with respect to the underlying investment.
D) volatility of the price movement of the underlying investment.
E) liquidity of the underlying investment.

Question

Quizplus · Accepted Answer

A buyer of a call option is speculating on the direction, timing, leverage, and volatility of the price movement of the underlying investment. However, the liquidity of the underlying investment is not directly related to the speculation involved in buying a call option, as it pertains more to the ease of buying or selling the investment without affecting its price, rather than the expected price movement or leverage.

A Buyer of the Call Option Is NOT Speculating on the