Buying and selling a call option on the same stock with the same strike price and expiration date is a
A) strip.
B) straddle.
C) spread.
D) split.

Question

Quizplus · Accepted Answer

Buying and selling a call option on the same stock with the same strike price and expiration date is known as a straddle. This strategy is used to profit from significant price movements in either direction, as the buyer and seller are betting on different outcomes. A strip is a bearish options strategy, a spread involves options with different strike prices or expiration dates, and a split refers to a corporate action where the number of shares outstanding increases while the price per share decreases.

Buying and Selling a Call Option on the Same Stock