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One reason that writing options can be a viable and profitable investment strategy is that

a. D - an option writer can stop a loss by buying the position.
b. A - the option writer collects the dividends.
c. C - an option writer has no legally binding obligation to stand behind the terms of the contract.
d. B- most options expire unexercised.

User Wigging
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1 Answer

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Final answer:

Most options expire unexercised, which allows the option writer to keep the premium received from selling the option as profit, without having to fulfill the contract.

Step-by-step explanation:

Writing options can be a viable and profitable investment strategy for several reasons. However, when it comes to the options presented, the most accurate reason is that most options expire unexercised. This means that the option writer, who earns a premium for selling the option, often gets to keep the premium as income without having to fulfill the contract. Option writers do not necessarily collect dividends because dividends are paid to shareholders, not option writers.

Additionally, an option writer does have a legally binding obligation to stand behind the terms of the contract if the option is exercised. Lastly, while an option writer can technically stop a loss by buying back the position, this is not the primary reason why writing options can be profitable.

User Crickeys
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