Q1-9. Which of the following statements are TRUE about the following stock option spreads? I. If there is no call option supply in the market. You may still be able to build a bull spread with put options. II. If you are a speculator and short on a butterfly spread, you are betting on an increase in stock price to be clustered around the strike price. III. If you are a speculator and long on a straddle, you will lose the most if the stock price is at the strike price. IV. If you are a speculator and long on a strip spread, you will gain more when the stock price goes above the strike price than when it goes below. I and III only D. II and IV only B. II and III only E. III and IV only C. I and IV only
Q1-9. Which of the following statements are TRUE about the following stock option spreads? I. If there is no call option supply in the market. You may still be able to build a bull spread with put options. II. If you are a speculator and short on a butterfly spread, you are betting on an increase in stock price to be clustered around the strike price. III. If you are a speculator and long on a straddle, you will lose the most if the stock price is at the strike price. IV. If you are a speculator and long on a strip spread, you will gain more when the stock price goes above the strike price than when it goes below. I and III only D. II and IV only B. II and III only E. III and IV only C. I and IV only
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Q1-9. Which of the following statements are TRUE about the following stock option spreads?
I. If there is no call option supply in the market. You may still be able to build a bull spread
with put options.
II. If you are a speculator and short on a butterfly spread, you are betting on an increase in
stock price to be clustered around the strike price.
III. If you are a speculator and long on a straddle, you will lose the most if the stock price is
at the strike price.
IV. If you are a speculator and long on a strip spread, you will gain more when the stock
price goes above the strike price than when it goes below.
I and III only
D. II and IV only
B. II and III only
E. III and IV only
C. I and IV only
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