You are a portfolio manager who uses options positions to customize the risk profile of your clients. In each case, what strategy is best given your client’s objective?
a. • Performance to date: Up 16%.
• Client objective: Earn at least 15%.
• Your scenario: Good chance of large stock price gains or large losses between now and end of year.
i. Long straddle
ii. Long bullish spread
iii. Short straddle
b. • Performance to date: Up 16%.
• Client objective: Earn at least 15%.
• Your Scenario: Good chance of large stock price losses between now and end of year.
i. Long put options
ii. Short call options
iii. Long call options
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