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      Question

      In a derivatives contract, the party who has the right

      but not the obligation to buy an asset is said to have a:
      A Long Futures position Correct Answer Incorrect Answer
      B Short Futures position Correct Answer Incorrect Answer
      C Long Call Option position Correct Answer Incorrect Answer
      D Long Put Option position Correct Answer Incorrect Answer
      E Short Call Option position Correct Answer Incorrect Answer

      Solution


        • Call Option:  Gives the holder the  right to buy  the underlying asset at a specified price (strike price) on or before a specified date.
        • Put Option:  Gives the holder the  right to sell  the underlying asset.
        • "Long" Position:  Refers to  buying  or  holding  the derivative contract.
        • "Short" Position:  Refers to  selling  or  writing  the derivative contract.
          Therefore, a party with the  right to buy  (call) who has  purchased  that right holds a  Long Call Option position . In a futures contract, both parties have an obligation, not a right.

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