
290 Derivatives and Risk Management
R E V I E W Q U E S T I O N S
1. Explain when a call option would be exercised.
2. Explain when a put option would be exercised.
3. What is meant by the intrinsic value of an option?
4. What is meant by the time value of an option?
5. Under what circumstances would you buy a call option?
6. Under what circumstances would you buy a put option?
7. Under what circumstances would you write a call option?
8. Under what circumstances would you write a put option?
9. An option contract is a zero-sum game between the option
buyer and the option writer. Explain this statement.
10. What are ...