Suppose you hold a call option. The stock price has recently been increasing-making your call option more valuable. Through what process might you take advantage of the liquid nature of the options market?
A) offsetting order
B) contract reconciliation
C) mark to market order
D) settling up
E) none of the above

Question

Quizplus · Accepted Answer

An offsetting order would allow the option holder to sell their call option for a profit, taking advantage of the increased value due to the stock price increase. This is a common practice in the options market, as options are traded like other financial instruments, and can be bought and sold to take advantage of price movements. Contract reconciliation, mark to market orders, and settling up are not relevant to this situation.

Suppose You Hold a Call Option