Chapter 02 · Section 2.1

Type

Note:
Sometimes you can find an options class defined as "options of the same type having the same underlying asset and the same expiration date." The definition employed in this course, which is the most commonly used, requires that two options be of the same type and on the same underlying asset. Which of the following options are of the same type?

a) IBM put July 145 and MMM put July 100.
b) IBM call July 145 and MMM put July 100.
• c) IBM call July 145 and IBM put July 145.
  No. Although both have a common underlying stock, a common expiration date and a common exercise price, one is a call and the other is a put. Therefore these two options are not the same type.

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