- CFA Exams
- CFA Level I Exam
- Study Session 16. Derivatives
- Reading 48. Derivative Markets and Instruments
- Subject 4. Contingent Claims
CFA Practice Question
All of the below refer to the same party in an option transaction except ______.
A. option seller/writer
B. holder of a LONG option position
C. holder of a SHORT option position
User Contributed Comments 5
| User | Comment |
|---|---|
| CFAMarco | help please!!! |
| andy4cfa | long=buyer, short=seller, C is the buyer of an option, thus is the correct answer |
| bobert | Writer, Seller, and Short are all synonymous for the person collecting the premium. The opposite position could be considered Long, buyer, or the holder of the option. Just try to get all three words for each position in your head and interchange them a lot because each set means essentially the same thing, and it will save you time on the exam if you can do it second nature. |
| pveace | Its still unclear! On my opinion C is correct! |
| anerudhan | Your opinion is wrong. As bobert said, those three things are synonymous. The only time it isn't synonymous is when you sell puts. The seller of puts is bullish on the underlying asset aKa when you sell puts, you're "long" the underlying asset. |