Long Position

B is correct. Purchasing call options provides bullish exposure with leverage and controlled risk. The maximum loss is limited to the $5,000 premium paid (matching his risk tolerance for total loss), while profit potential is unlimited as the stock rises above the $60 breakeven (strike $55 + premium $5). This aligns with his bullish outlook, desire to maximize upside, and willingness to lose his investment.

A (buying stock) provides bullish exposure but requires the full $10,000 capital and has maximum loss of $10,000 (if stock goes to zero), which is double his stated acceptable loss. While unlimited upside exists, the capital requirement and larger potential loss make options more suitable for his stated objectives. C (buying puts) is incorrect because puts profit when prices fall (bearish), contradicting his bullish outlook on renewable energy. D (selling calls) is inappropriate because it creates limited profit (premium only) with potentially unlimited loss if the stock rises sharply, conflicting with his desire to maximize upside and his moderate risk tolerance.

B is correct. For a long stock position, the maximum loss occurs if the stock price falls to zero, resulting in a total loss equal to the purchase price. In this case, $75 per share × 100 shares = $7,500 maximum loss. The investor owns the shares outright and can lose the entire investment if the company becomes worthless.

A is incorrect because it confuses long and short positions. Long positions have limited loss (purchase price) and unlimited profit potential (as price rises). Short positions have unlimited loss potential (as price rises) and limited profit (to zero). C incorrectly describes options characteristics; stocks do not involve premium payments, only the purchase price. D is incorrect because Regulation T margin requirements (50% initial margin for margin accounts) relate to borrowing capacity, not maximum loss. Even in a margin account, the maximum loss for a long position remains the full purchase price if the stock becomes worthless.

A is correct. Calculate the long call profit/loss:
1. Stock price at expiration ($92) - Strike price ($80) = $12 intrinsic value per share
2. Intrinsic value ($12) - Premium paid ($6) = $6 profit per share
3. Profit per share ($6) × 100 shares = $600 total profit

Alternatively, breakeven = Strike + Premium = $80 + $6 = $86. Since the stock is at $92 (which is $6 above breakeven), the profit is $6 per share × 100 shares = $600.

B ($1,200) incorrectly doubles the profit, perhaps by not subtracting the premium cost. C ($600 loss) incorrectly treats the position as a loss instead of a profit. D ($1,800) incorrectly calculates $92 - $80 = $12, then multiplies by 100 shares to get $1,200, then adds the premium instead of subtracting it ($1,200 + $600 = $1,800), which is mathematically wrong.

C is correct (the EXCEPT answer). This statement is FALSE. A long call option position has LIMITED maximum loss equal to the premium paid, not unlimited loss. If the stock price rises above the strike price, the long call becomes profitable, not a source of unlimited loss. The buyer's maximum loss is capped at the premium paid regardless of how high or low the stock price moves.

A is accurate: long stock positions have unlimited profit potential because there is theoretically no limit to how high a stock price can rise. B is accurate: the maximum loss for a long stock position is the full purchase price if the stock falls to zero (becomes worthless). D is accurate: long positions (whether stock or options) are established when investors expect prices to rise, reflecting a bullish outlook on the security.

B is correct. Statements 1, 2, and 3 are accurate.

Statement 1 is TRUE: Current price ($48) - Purchase price ($40) = $8 profit per share. $8 × 200 shares = $1,600 unrealized profit (profit on paper, not yet realized through sale).

Statement 2 is TRUE: Maximum additional loss from the current price of $48 is if the stock falls to zero: $48 × 200 shares = $9,600. This is the most the investor can lose from the current price level (not counting the $1,600 unrealized profit already gained).

Statement 3 is TRUE: Long positions profit when prices rise. If TechGrowth increases from $48 to any higher price, the unrealized profit will increase accordingly.

Statement 4 is FALSE: This statement confuses stock positions with option positions. Stocks do not have expiration dates or exercise requirements. The investor can hold the shares indefinitely and realize profits whenever they choose to sell. Only options have expiration dates and exercise decisions.