标题: credit risk with put option [打印本页] 作者: Viceroy 时间: 2011-7-11 20:05 标题: credit risk with put option
confused on a Schweser Q Bank question about credit risk. The "correct" answer indicates the holder of a put option has no credit risk. Aren't they exposed to the posibility that at expiration the counter-party won't be able to deliver the underlying at the agreed upon price?作者: Zestt 时间: 2011-7-11 20:05
issuer not holder has no credit risk作者: infinitybenzo 时间: 2011-7-11 20:05
No current credit risk in European option. Only Potential credit risk.
If this is the question I think it is, it says "current credit risk."
Edited 1 time(s). Last edit at Saturday, May 28, 2011 at 02:52PM by Paraguay.作者: Darien 时间: 2011-7-11 20:05
Goodman, only the long has risk. Issuer is short. Didnt you memorize all this rainman?作者: bpdulog 时间: 2011-7-11 20:05
Full explanation was:
The holder of a short option position has received all the income it can expect. Thus, it has no credit risk. Both remaining listed positions have some credit risk.
They obviously meant issuer when they used the term holder. Is that accurate? Isn't the "holder" the one long the option, or can the term be used both ways? Wanted to double check before reporting error to Schweser.作者: lcai 时间: 2011-7-11 20:05
Confusing terminology but not incorrect.
You can hold a short option position in an account.作者: Chuckrox 时间: 2011-7-11 20:05
you should post the question maybe some hint there作者: justin88 时间: 2011-7-11 20:05
barcelona 1:0作者: Unforseen 时间: 2011-7-11 20:05
Holder of a short = Seller
As others have said, there is no credit risk for the seller of an option.
