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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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Answer:

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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