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5 November, 06:48

If a customer buys back an option which was previously written, the transaction is referred to as a (n) : (A) Opening purchase (B) Opening sale (C) Closing sale (D) Closing purchase

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  1. 5 November, 07:09
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    The correct answer is letter "D": Closing purchase.

    Explanation:

    Traders buy back an asset that was previously purchased to close that position. In such cases, traders have a short position of the asset, which implies they are expecting the price of the asset to go down to make a profit. When talking about options, the option buyback allows the trader to exit the position closing the purchase.
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