26) The writer of a put A) accepts the obligation to sell a predetermined number

Question

26) The writer of a put A) accepts the obligation to sell a predetermined number of shares at a predetermined price. B) is betting the price of the underlying security will increase in value. C) is hoping that the put will be in-the-money prior to expiration. D) will pay the premium whether or not the option is exercised. 30) ETF options are settled in A) cash. B) ETF shares. C) share of the companies in the index. 35) The maximum amount that the price of a futures contract can change during the day is referred to as A) the swing limit. B) the maximum daily range. C) the daily margin limit. D) the leverage restriction. 38) The value of a futures option is defined as A) the difference between the option's strike price and its original purchase price. B) the difference between the option's strike price and the market price of the underlying futures contract. C) the strike price of the option multiplied by the mark-to-the-market value. D) the mark-to-the-market value divided by the strike price.

Explanation / Answer

26 The writer of a put

A) accepts the obligation to sell a predetermined number of shares at a predetermined price.

B) is betting the price of the underlying security will increase in value.

C) is hoping that the put will be in-the-money prior to expiration.

D) will pay the premium whether or not the option is exercised.

answer is B) is betting the price of the underlying security will increase in value.

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