Options Flashcards
1
Q
What is the difference between naked writing and covered writing
A
Naked writing is when you are selling an option without ownership of the underlying asset. Covered writing is when you own that underlying asset
2
Q
What is a floor?
A
It is the minimum selling price for a stock
= Stock + Put
3
Q
What is a cap ?
A
It is the maximum purchasing price for a stock
=Call- Stock
4
Q
What is a covered put?
A
= - floor
= - Stock - Put
5
Q
What is a covered call?
A
= - cap
= -Call + Stock
6
Q
Which of the following options is/are path-dependent?
Asian option Barrier option Gap option Compound option A I only
B
II only
C
I and II only
D
I, II, and III only
E
II, III, and IV only
A
C
I and II only
Asian and Barrier
