Purchasers of options can have a number of different objectives. One of your clients who is a soft drink fan already has a long position in KO. What would be a possible reason for this client to go long a KO call option?
A) To complete the other side of a spread.
B) Owning a long call on stock you already own offers a hedge against a market decline.
C) This would generate additional income.
D) To fix the cost of acquiring additional stock to the portfolio.
Answer: D) To fix the cost of acquiring additional stock to the portfolio.