What is the primary motivation for an option writer to sell call options?

They believe the underlying asset's price will decrease. They believe the underlying asset's price will increase. They need to generate immediate cash flow. They want to hedge against existing long positions.

What is the maximum profit a call option seller can achieve?

The strike price of the option. The difference between the strike price and the spot price. The premium received for selling the option. Unlimited profit potential.

When does a call option seller begin to incur losses?

When the spot price falls below the strike price. When the spot price exceeds the strike price. When the spot price equals the strike price. When the premium received is less than the brokerage fees.

What is the term used to describe the point at which a call option seller starts to lose money?

Breakeven point Profit threshold Strike point Breakdown point

Why are margins required for option sellers?

To compensate for the limited profit potential. To cover potential losses due to unlimited risk. To ensure the option buyer fulfills their obligations. To stabilize the options market and prevent price fluctuations.

What type of options are currently traded in India?

Only American options Only European options Both American and European options Binary options

What does the abbreviation 'CE' represent in options trading?

Call European Covered Equity Contract Expiration Call Exercise

What is the key difference between American and European options?

The underlying asset they are based on. The premium paid by the option buyer. The timing of option exercise. The risk profile for the option seller.