Which one of the following statements concerning call option writers is true?
A)Call option writers promise to purchase shares if the call option is exercised.
B)The call option writer has the option,but not the obligation,to purchase shares if the option is exercised.
C)The call option writer is betting that the market price of the underlying asset will increase.
D)The call option writer receives a cash payment when the option is written.
E)The call option writer earns a profit when an in-the-money option is exercised.

Question

Quizplus · Accepted Answer

The call option writer receives a premium (a cash payment) from the option buyer when the option contract is initially written. This premium is the income for taking on the obligation to sell the underlying asset at the strike price if the option is exercised by the buyer.

Which One of the Following Statements Concerning Call Option Writers