Please correct my understanding under below situation and answer some question in below situation... text that inside " simbol is from the book. "Scenerio 1: Current SET50 index is 875 points. Mr.A Anticipate SET50 to significantly rise so Mr.A Open 1 long position on a call option at strike price 875 points and pay premium 25 points. Mr. B short this call option. Now Mr.A & Mr.B is counterparty." (I doubt that Can Mr.B open short call position before counterparty open long call position and Mr.B must have underlying asset of the option or not, if not in expiration date, counterparty exercise this call option what's happen to Mr.B) "Before expiration date SET50 index is 890. Suppose premium is then 47 points. Mr A make decion to short close this option(close out before expiration).
Please correct my understanding under below situation and answer some question in below situation... text that inside " simbol is from the book.
"Scenerio 1: Current SET50 index is 875 points. Mr.A Anticipate SET50 to significantly rise so Mr.A Open 1 long position on a call option at strike price 875 points and pay premium 25 points. Mr. B short this call option. Now Mr.A & Mr.B is counterparty."
(I doubt that Can Mr.B open short call position before counterparty open long call position and Mr.B must have underlying asset of the option or not, if not in expiration date, counterparty exercise this call option what's happen to Mr.B)
"Before expiration date SET50 index is 890. Suppose premium is then 47 points. Mr A make decion to short close this option(close out before expiration). Then Mr.A earn the premium”
In my understanding A will earn the premium equal to 47 minus 25 point by short closed this option and I doubt whether this long call 1 position at 47 points will be closed by clearing house or other people, for example Mr. C can buy this option from mr.A & inherit this long call option and this option valid until expiration date and after this event Mr. C & Mr. B is the counterparty. In case that the option have to be closed before expiration becauce Mr.A short close this option what's happen with Mr.B. & I'm also wonder that Can Mr.B close his short long option by himself or not. If he can, what will happen with Mr A & Mr. B?
Thank you so much for your answering
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