Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Options > Income Strategies > Flashcards

Income Strategies Flashcards

1
Q

What is an income strategy?

A

They involve SELLING options to earn the premium to earn the premium. They are suitable only in a STABLE market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the characteristics of longing a stock and shorting a call the exact same as?

A

Selling a PUT!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the characteristics of shorting a stock and shorting a PUT the exact same as?

A

Selling a CALL!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

When would a customer write CALLS against a long stock position?

A

When the customer believes stock will appreciate long term, but short term will be stable
- max loss = cost of stock less premium received

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the characteristics of writing a PUT agains a SHORT stock position?

A

Not very popular
Max gain = premium received
Max loss = unlimited if stock price rises

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

When is a collar used on a LONG STOCK position?

A
  • maintains the price of a security within a desired range

- used when a security appreciates substantially and therefore not likely to increase further

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When does a Collar exist?

A

Long an out the money PUT anddd

Short an out the money CALL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly

Options (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions