47 -Market Organization And Structure

Question 1

LOS 47.e: Compare the positions an investor can take in an asset

Answer 1

Long Position - Gains when asset values increase (Purchase stock or calls, sell puts, take long futures or forward positions)

Short Position - Gain when asset values decrease (Sell short, sell/write calls, purchase puts, take short positions in furred and forwards)

Question 2

Profiting on Calls and Puts

Answer 2

Profit earned when asset increases:
   Buy a call
   Sell a put
Profit earned when asset decreases: 
   Buy a put
   Sell a call