Which of the following represents a long position in an option?
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A long position is always the buying position. Remember that the buyer of an option is said to have gone long the position, while the writer (seller) of the option is said to have gone short the position.
Which of the following statements about put and call options at expiration is least accurate?
Put | Call |
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The maximum gain to the buyer of a put is limited to the value of the stock less the premium. The maximum loss to the writer of a call is unlimited.
Regarding buyers and sellers of put and call options, which of the following statements concerning the resulting option position is most accurate? The buyer of a:
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The buyers of both puts and calls are taking long positions in the options contracts (but the buyer of a put is establishing a potentially short exposure to the underlying), while writers (sellers) of each are taking short positions in the options contracts.
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