Canadian Securities Course (CSC) Practice Exam · Question
An investor who buys a call option on a stock is speculating on which of the following?
A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price, meaning they profit if the stock price rises
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Question: An investor who buys a call option on a stock is speculating on which of the following?
Answer options:
- The stock price will decrease.
- The stock price will remain stable. ✅ The stock price will increase.
- The stock's volatility will decrease significantly.
Correct answer: The stock price will increase.
Explanation: A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price, meaning they profit if the stock price rises above that price.
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