Chapter 02 · Section 2.1

Short vs. Long Calls

Which of the following is true?

a) A long call gives its holder the right to enter a long position in the underlying asset, whereas a short call gives him the right to enter a short position in the underlying asset.
b) A long call is a call written by somebody who owns the necessary quantity of the underlying asset, whereas a short call is written by somebody who does not own the underlying asset.
• c) A long call is a call written by somebody who owns the necessary quantity of the underlying asset, whereas a short call is written by somebody who does not own the underlying asset.
  Yes. "A long call" is a more convenient expression for "a long position in a call" or "the purchase of a call"; "a short call" means "a short position in a call". The same applies to "long put" and "short put". Continue

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