Option

When someone "writes" a call option, he/she has:

• taken a "long" position in a futures contract.

• "marked to market" a futures contract.

• sold a call option.

• bought a call option.

A call option exists on the stock of Macroswift Corporation. The exercise price is $45. Right now the call option can be purchased for $7. Macroswift stock is currently selling for $50 per share. What is the "intrinsic value" of the call option?

• $0

• $3

• $2

• $5

A call option exists on the stock of Macroswift Corporation. The exercise price is $45. Right now the call option can be purchased for $7. Macroswift stock is currently selling for $50 per share. What is the current "premium" on the call option?

• $7

• $0

• $3

• $2

In a call option contract, the price at which the option owner can buy the underlying stock is called the:

• option's premium

• option's exercise price

• option's strike price

• underlying asset's price

Last month, Mary bought a call option on ABC Corp. stock, having an exercise price of $30. Mary paid $1 for this call. Today, ABC stock is trading at $40 per share. Which of the following is true?

• Mary has now realized a $10 profit.

• Mary has now realized a $10 loss.

• Mary's option is out of the money.

• Mary's option is in the money.

A call option's premium minus its intrinsic value is known as its:

• exercise price

• strike price

• expiration value

• time value

Which of the following has the right to sell an asset at a predetermined price?

• A call writer.

• A call buyer.

• A put buyer.

• A put writer.

Which of the following is potentially obligated to sell an asset at a predetermined price?

• A call buyer.

• A call writer.

• A put writer.

• A put buyer.