Derivatives【 Reading 37】习题精选
An investor believes that a stock they own will continue to oscillate in price and may trend downward in price. The best course of action for them to take would be to: A)
| enter into both a covered call and protective put strategy. |
| B)
| sell call options on the stock. |
| C)
| buy put options on the stock. |
|
With a stock that is oscillating in price in which it is not trending upward, a covered call strategy is appropriate in which the investor owns the underlying asset and sells call options to enhance income. This strategy will work as long as the stock price does not go above the call strike price. In a downward trending market in which the investor believes the stock price will decrease, a protective put is appropriate in which they purchase a put on the underlying stock. |