Identify the INCORRECT statement about spread strategies created by trading options of the same type (either all calls or all puts) on the same underlying with identical terms (unless noted otherwise) :
A) Vertical spreads (also called money,perpendicular,or price spreads) are established by buying one option and selling another option with a different strike price.
B) Horizontal spreads (or,time or calendar spreads) are established by buying one option and selling another option with the same strike but different maturity dates.
C) Diagonal spreads are established by buying one option and selling another option that differ both in terms of strike price and maturity dates.
D) A butterfly spread is created by trading four options with three different strike prices: two options with extreme strike prices are bought (written) and two options are written (bought) with the middle strike price.
E) A condor spread is created by trading four options with three different strike prices: two options with extreme strike prices are bought (written) and two options are written (bought) with the same middle strike price.
Correct Answer:
Verified
Q2: CatIns Corp.(a fictitious name)sells homeowners' insurance contracts
Q3: Which of the following statements regarding Warren
Q4: CatIns Corp.(a fictitious name)sells homeowners' insurance contracts
Q5: A European call on OPSY stock with
Q6: Goldminers Inc.mines and refines ore and
Q7: CatIns Corp.(a fictitious name)sells homeowners' insurance contracts
Q8: Which of the following statements is INCORRECT
Q9: CatIns Corp.(a fictitious name)sells homeowners' insurance contracts
Q10: Suppose you write a covered put option
Q11: YBM has made an offer to buy
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents