1. a person would buy a call option when the stock price is expected to increase; their gain would be
the dierence between the stock price at maturity and the exercise price less the premium paid for
buying the call option, and
2. a person would buy a put option when the stock price is expected to decrease; their gain would be
the dierence between the exercise price and the stock price at maturity less the premium paid for
buying the put option.
Since buying a call is appropriate when the stock price is expected to increase, it is oen erroneousl ...
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