All of the following are advantages of buying call options instead of stock EXCEPT:
A)options represent an opportunity to control shares of stock without making a large dollar commitment.
B)commissions on stock trading are greater than those on options trading.
C)options can be quite conservative and used to reduce risk.
D)All of the above are advantages

Question

Quizplus · Accepted Answer

Options can be risky. Leverage is a very common reason for buying call options when the market is expected to rise during the exercise period. The use of calls in this way is similar to warrants discussed in Chapter 13, but calls have shorter lives. The call option is priced much lower than common stock, and the leverage is derived from a small percentage change in the price of the call option. Playing the leverage game doesn't always work. It is not hard to lose all your money under these circumstances; leverage works in reverse, too.

All of the Following Are Advantages of Buying Call Options