Suppose you expect the volatility is high and the price of the underlying will fall, which of the following strategies is not preferred?
A. Short call
B. Short underlying
C. Long put
D. Short forward
Short forward
When party enters a forward contract, short position is one where party will sell the asset. A fall in the price of asset will lead to loss for the seller.
Suppose you expect the volatility is high and the price of the underlying will fall, which...
Suppose you expect the volatility is high and is uncertain about the price movement of the underlying, which of the following is your best strategy? A. Long put B. Long butterfly spreads C. Long call D. Long straddle
Which of the following is not an insurance strategy against decrease in underlying asset price? A. Long put B. Floor C. Long forward D. Short call
mich of the following strategy can make profit from underlying price drop? A. Buying a put B. Selling a put C. Protective put D. Bullish spread E. None above 7. Which of the following is the riskiest single-option transaction? A. Writing a call B. Buying a put C. Writing a put D. Buying a call E. Riskiness of the all the strategies above is the same 8. Which of the following combinations have similarly shaped profit/loss diagrams? A. Covered Call...
Suppose you buy 100 shares of Google stock which has a current price of $1,265.13 a share. You want to ensure that you do not lose more than $200 a share. Which of the following option strategies would allow you to do this? A. A covered call B. A naked call C. A protective put D. You cannot ensure that you will not have losses with stocks Suppose I buy 100 shares of AMD and want to limit my losses...
Which set of conditions will result in a bond with the greatest volatility? a. A high coupon and a short maturity b. A deferred call feature and a sinking fund. c. A low coupon and a short maturity d. A high coupon and a long maturity e. A low coupon and a long maturity
5. Suppose that you sold an American put option P on the underlying stock ABC. You calculated the delta and gamma of the put option and found Ap = -0.4 and Ip= 0.3. Suppose you want a position which is both delta and gamma neutral. Determine the hedge in the following two cases: (a) Use the underlying stock itself and a call option C on the stock (with different strike and maturity as the put), with Ac 0.25 and Io...
Suppose you are a farmer and you enter a long put position on corns to hedge your risk. Which of the following cannot help to reduce the cost of insurance? A. Long another put option with smaller strike price. B. Choose a smaller strike price instead. C. Short another call option with higher strike price. D. Use a short forward position instead.
QUESTION 36 Suppose that there’s a high probability of bankruptcy for an underlying stock, which of the following statements is true? a. The price of a European put option is lower compared to the price of an equivalent American put option. b. The price of a European put option is higher compared to the price of an equivalent American put option. c. Cannot determine based on the given information.
NEED HELP . It pays to invest in a strap if you expect the A. volatility of the asset price to be low, and an upward movement in stock price is more likely than a downward movement B. volatility to be low, and a downward movement in stock price is more likely C. volatility to be high, and an upward movement in stock price is more likely D. volatility to be high, and a downward movement in stock price is...
6. The 4 fundamental option positions are _____. Hint: This question is from the reading that Dr. Byers discussed and his lecture on "How to Build Option Strategies -- 19 Option Strategies". a. All of the above b. long call, long put, short call, and short put. c. sideways call, long put, short call, and sideways put. d. up call, up put, down call, and down put. 7. Another name for the collar strategy we discussed is _______? Hint: This...