Exam 17: An Introduction to Options

If the price of a stock rises substantially, the investor who wrote a covered call 1. earns a modest profit 2. sustains a modest loss 3. lost an opportunity for a large profit

The price of a call option is often more volatile than the price of the underlying stock.

An investor may reduce risk by simultaneously purchasing a stock and a put option.

The intrinsic value of a put depends on 1. the strike price 2. the price of the stock 3. the term on the put

As the price of a stock rises, the time premium paid for an option to buy stock increases.