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Which of the following choices are both the stock and options positions on different sides of the market

a- long call / short stock
b- short call / long stock
c- long put / short stock
d- short put / long stock

User Jmagder
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1 Answer

3 votes

Answer:

a- long call / short stock.

b- short call / long stock.

Step-by-step explanation:

In trading and investment, a stock option can be defined as a contract that states that the buyer as the right to buy (call) or sell (put) an asset at a particular price at any time but necessarily obligational. Thus, it is strictly at the discretion of the buyer (investor).

Generally, in a long (buy) position, a buyer hopes that the price of stocks will rise because he or she will typically profit from a rise in price.

However, a short (buy) position, a buyer hopes that the price of stocks will fall because he or she will typically profit from a fall in price.

Hence, a long and short position are both on different sides of the market.

Therefore, the following choices are both the stock and options positions on different sides of the market;

a. Long call/short stock.

b. Short call/long stock.

However, a stock and options positions both on the same side of the market are;

a. Long call/long stock.

b. Long put/short stock.

In a nutshell, in a rising market long stock positions are profitable while in a falling or perhaps stable market short calls are profitable to investors.

User Sefler
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