n NISM Certifications
X NISM Series X
Medium

How are the payoffs in options positions characterized in bullish and bearish markets?

Practice question from NISM Series XB- Investment Adviser (Level 1) Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Symmetrical

  2. Asymmetrical

    Correct answer

  3. C

    Random

  4. D

    Elliptical

Why this is the answer

Options have asymmetric payoffs; for example, a long call offers unlimited upside with limited downside (premium paid), whereas a short call has limited upside but potentially unlimited downside.

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