A call option writer:
A) is obliged to buy the underlying security if the option is exercised.
B) has a maximum profit equal to the premium plus the strike price.
C) makes a loss to the left of the strike price.
D) none of the above.

Question

Quizplus · Accepted Answer

A call option writer is obliged to sell, not buy, the underlying security if the option is exercised. The maximum profit is limited to the premium received, not the premium plus the strike price. The writer makes a loss if the market price exceeds the strike price, not to the left of it.

A Call Option Writer