Chapter 02 · Section 2.1
Exerciseable positions
Which of the following positions allow you to exercise
a) Long call
b) Short call
c) Long put
d) Short put
e) Long call & long put
Remember, it is always the holder of an option who has the right to decide whether to exercise the option.
You have the choice to exercise if you are long a call. But if you are short a call, you must accept someone else's choice, and fulfill your obligation.
If you have a long call or put you can decide whether you want to exercise the option.
You are right about the long call. A call holder has the choice to exercise. But a short put does not give the option writer that choice.
You are right about the long put. A put holder has the right to exercise. But a short call does not give the option writer that choice.
When you are short an option you must accept the holder's righ to exercise.
You are right about the long put. A put holder has the right to exercise. But a short put does not give the option writer that choice.