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. Buy a call option Write a call option Long straddle Long bullish spread Short straddle Short bullish spread Performance to date: Up 16%. b. . Client objective: Earn at least 15% with limited losses Your scenario: Good chance of large stock price losses between now and end of year. Short put options Long put options Short call options Long call options
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. Buy a call option Write a call option Long straddle Long bullish spread Short straddle Short bullish spread Performance to date: Up 16%. b. . Client objective: Earn at least 15% with limited losses Your scenario: Good chance of large stock price losses between now and end of year. Short put options Long put options Short call options Long call options
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
Problem 1PS
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Transcribed Image Text: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.
Buy a call option
Write a call option
Long straddle
Long bullish spread
Short straddle
Short bullish spread
Performance to date: Up 16%.
b. .
Client objective: Earn at least 15% with limited losses
Your scenario: Good chance of large stock price losses between now and end of
year.
Short put options
Long put options
Short call options
Long call options
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