You have sold a call option on Ausia Co. stock with a strike price of $50. You do not intend to make any other transactions before the options expiration date. The current stock price is $30. Which of the following statements best describes your hopes for the stock?

Question

Quizplus · Accepted Answer

As the seller of a call option, you want the stock price to stay below the strike price of $50. This would prevent the buyer of the option from exercising their right to buy the stock from you at $50 per share. Since the current stock price is $30, you are indifferent to any small fluctuations in the stock price as long as it does not exceed the strike price. Therefore, your hope for the stock is that it stays under $50, and you are indifferent to any small changes within that range.

You Have Sold a Call Option on Ausia Co