Podcast
Questions and Answers
Which option strategy is the best choice to hedge against an anticipated large rise in the price of an underlying asset?
Which option strategy is the best choice to hedge against an anticipated large rise in the price of an underlying asset?
Which option strategy involves buying a call option and selling a put option, both with the same strike price and expiration date?
Which option strategy involves buying a call option and selling a put option, both with the same strike price and expiration date?
Which option strategy involves buying a call option and selling a put option, both with different strike prices and the same expiration date?
Which option strategy involves buying a call option and selling a put option, both with different strike prices and the same expiration date?
Which option strategy involves buying a call option and selling a put option, both with the same strike price and expiration date?
Which option strategy involves buying a call option and selling a put option, both with the same strike price and expiration date?
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Which option strategy involves buying a call option and selling a put option, both with different strike prices and the same expiration date?
Which option strategy involves buying a call option and selling a put option, both with different strike prices and the same expiration date?
Signup and view all the answers
Which option strategy involves buying a call option and selling a put option, both with the same strike price and different expiration dates?
Which option strategy involves buying a call option and selling a put option, both with the same strike price and different expiration dates?
Signup and view all the answers
Study Notes
Hedging Against Price Rise
- A long call option strategy is the best choice to hedge against an anticipated large rise in the price of an underlying asset.
- This strategy allows investors to gain from increasing asset prices while limiting losses to the premium paid for the option.
Selling Call and Put Options (Same Strike Price)
- Involves buying a call option and selling a put option at the same strike price and expiration date.
- Known as a synthetic long position, this strategy mimics holding the underlying asset.
Buying Call and Selling Put Options (Different Strike Prices)
- Involves buying a call option and selling a put option with different strike prices but the same expiration date.
- This strategy can create a potential profit range while mitigating risks associated with the underlying asset's price movements.
Selling Call and Put Options (Different Expiration Dates)
- Involves buying a call option and selling a put option at the same strike price but with different expiration dates.
- This approach allows traders to take advantage of time decay while maintaining positions aligned with anticipated market movements.
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Description
Test your knowledge on option strategies for hedging against anticipated large rises in the price of an underlying asset. Choose the best strategy among options such as long straddle, covered call, call bull spread, and more.
