A speculator has written an option on the shares of Sonic Healthcare.

Posted: January 10th, 2022

A speculator has written an option on the shares of Sonic Healthcare.

(a) Discuss the differences between a covered option and a naked call option.

(b) What requirements will be applied by an options exchange to ensure that the option writer can meet the contract obligations? (LO 20.2)

(a) Options exchanges tend to specialise in certain option contracts. Discuss this statement within the context of the international options markets.

(b) Option contracts may be traded by open outcry or through electronic trading systems. Briefly explain each of these methods used for trading option contracts. (LO 20.3)