________ is the most risky transaction to undertake in the share index option markets if the share market is expected to fall substantially after the transaction is completed.
A)Writing an uncovered call option
B)Writing an uncovered put option
C)Buying a call option
D)Buying a put option

Question

Quizplus · Accepted Answer

Writing an uncovered put option involves selling a put option without owning the underlying shares. If the share market falls substantially after the transaction is completed, the seller of the put option will be obligated to buy the shares at the higher strike price. This can result in significant losses for the seller. Therefore, writing an uncovered put option is considered the most risky transaction to undertake in the share index option markets if the market is expected to fall substantially.

________ Is the Most Risky Transaction to Undertake in the Share