Use the figure for the question below.
-This graph depicts the payoffs of a ________.
A) short position in a put option at expiration
B) short position in a call option at expiration
C) long position in a put option at expiration
D) long position in a call option at expiration

Question

Use the figure for the question below. 
-This graph depicts the payoffs of a ________.
A) short position in a put option at expiration 
B) short position in a call option at expiration 
C) long position in a put option at expiration 
D) long position in a call option at expiration

Quizplus · Accepted Answer

The graph represents a short position in a call option at expiration, where the payoff increases as the underlying asset's price decreases, up to a point (the option's strike price), and then decreases as the asset's price increases beyond the strike price. This is characteristic of the risk and payoff profile for someone who has sold a call option.

Use the Figure for the Question Below