There’s a question in this topic test that asks about the value of a collar position on a stock at expiration of the options. I chose the response that was the change in VALUE of the position and the correct answer apparently was the PROFIT of the position. Given all the time that is devoted to discussing both VALUE and PROFIT of option positions in the CFA text, when they asked for the VALUE, I assumed they meant the final value of the position (which is before deducting the initial outlay) rather than the profit, which is after deducting initial outlay.
Should I always assume that when they ask for value they really mean profit? This is the stuff that pisses me off…
Should I always assume that when they ask for value they really mean profit? This is the stuff that pisses me off…