Question

At expiration, if the market price of the underlying common stock and the strike price are the same, each of the following customer positions will show a profit EXCEPT:

A) short puts.
B) long straddles.
C) short straddles.
D) short calls.

Answer 1

The correct answer is short puts. At expiration, if the market price of the underlying common stock and the strike price are the same, all options will be worthless except for short puts.

Step-by-step explanation:

The correct answer is A) short puts. At expiration, if the market price of the underlying common stock and the strike price are the same, all options will be worthless except for short puts. A short put position involves selling a put option, and the profit in this case is the premium received from selling the option. Since the option is worthless at expiration, the short put position will show a profit.