Series 3: Exercise

Exercise

Answer true or false.

1. 1. _____ An American option can be exercised at any time up to and including the closing date.
2. 2. _____ Only an investor who buys a put or call, and not an investor who sells a put or call, is said to be opening a position.
3. 3. _____ Someone who is long a call options contract can close out his position by selling a put on the same underlying product.
4. 4. _____ A naked call option is written by someone who does not own the underlying security or commodity.
5. 5. _____ An investor who has shorted a product and then writes a put on that commodity is said to be writing a naked put.
6. 6. _____ If a call option expires in six months, it can be bought on margin.
7. 7. _____ The writer of a naked call equity option whose underlying asset is valued at $5,000 must have at least $500