Question

In: Finance

Selling puts is very much like which of the following? Use letters in alphabetical order to...

Selling puts is very much like which of the following?

Use letters in alphabetical order to select options

  1. A Covered calls.

  2. B Buying insurance.

  3. C Selling naked calls.

  4. D Buying stock.

Buying puts is similar to which of the following?

Use letters in alphabetical order to select options

  1. A Buying insurance.

  2. B Selling naked calls.

  3. C Buying stock.

  4. D Covered calls.

Solutions

Expert Solution

1. Selling put option is indicative of a strategy which reflects that a trader is bullish.

Buying stock is another strategy which indicates that a trader is bullish.

So it can be said that selling put options is just like buying stocks.

Rest of the positions like covered call, buying insurance, selling naked calls are indicative of bearish strategy.

Correct answer is option (D) Buying Stock

2. Buying put option is just like buying an insurance because buying an insurance is providing hedge against any downside in life.

Rest of the options are not appropriate in this regard because some of them are either hedging strategies for some of them will have unlimited loss.

Correct answer is option (A ) Buying Insurance.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

How are the insurance premiums determined for deposit insurance? Use letters in alphabetical order to select...
How are the insurance premiums determined for deposit insurance? Use letters in alphabetical order to select options A The insurance premium is based on the bank’s level of riskiness and then adjusted according to the level of deposits of the overall U.S. banking system. B The insurance premium is based on the bank’s level of deposits and then adjusted according to the riskiness of the overall U.S. banking system's financial situation. C The insurance premium is based on the bank’s...
For the questions below, enter only the letters that are part of the answer, with no spaces or commas, in alphabetical order.
What is the size of the tax?What is the equilibrium quantity before the tax?What is the equilibrium quantity with the tax?What is the price consumers pay before taxes?What is the price consumers pay with the tax?What is the price sellers receive before taxes?What is the price sellers receive with the tax?For the questions below, enter only the letters that are part of the answer, with no spaces or commas, in alphabetical order. (Example: enter something like XYZor AZ, do not...
Which one of the following lists puts the events below in the correct order? 1. bipolar...
Which one of the following lists puts the events below in the correct order? 1. bipolar cells depolarize 2. glutamate release from the photoreceptor cell decreases 3. light strikes photoreceptor cells 4. photoreceptor cells are depolarized 5. photoreceptor cells are hyperpolarized 1,2,3,4,5               b. 2,4,3,5,1          c. 3,4,2,5,1           d. 4,3,5,2,1          e. 5,3,4,1,2 A sound wave is headed toward your ear. In which order would the signal travel through the following structures as it traveled to the auditory nerve? The structures, in alphabetical...
Following is the adjusted trial balance, with accounts in alphabetical order, for TRN Magazine as at...
Following is the adjusted trial balance, with accounts in alphabetical order, for TRN Magazine as at January 31, 2017: Debit Credit Accounts receivable $ 21,300 Accumulated depreciation, equipment $ 12,300 Cash 8,800 Depreciation expense, equipment 1,650 Equipment 19,300 Interest income 480 Rent expense 17,800 Salaries expense 61,300 Subscription revenues 71,300 Trish Norris, capital 46,470 Trish Norris, withdrawals 19,700 Unearned subscription revenue 19,300 Totals $ 149,850 $ 149,850 Required: Prepare the closing entries. (If no entry is required for a transaction/event,...
The following is a list of accounts, in alphabetical order, for Sandhill, Inc. at July 31,...
The following is a list of accounts, in alphabetical order, for Sandhill, Inc. at July 31, 2018: Accounts payable $ 9,800 Income tax expense $ 2,900 Accounts receivable 14,000 Insurance expense 1,700 Accumulated depreciation—equipment 20,800 Interest expense 3,600 Bank loan payable, due 2020 39,100 Prepaid insurance 200 Cash 5,900 Rent expense 9,100 Common shares 37,000 Repairs and maintenance expense 10,400 Depreciation expense 9,400 Retained earnings 20,800 Dividends declared 800 Salaries expense 25,500 Equipment 98,600 Salaries payable 700 Held for trading...
The following is a list of accounts, in alphabetical order, for Sandhill, Inc. at July 31,...
The following is a list of accounts, in alphabetical order, for Sandhill, Inc. at July 31, 2018: Accounts payable $ 9,800 Income tax expense $ 2,900 Accounts receivable 14,000 Insurance expense 1,700 Accumulated depreciation—equipment 20,800 Interest expense 3,600 Bank loan payable, due 2020 39,100 Prepaid insurance 200 Cash 5,900 Rent expense 9,100 Common shares 37,000 Repairs and maintenance expense 10,400 Depreciation expense 9,400 Retained earnings 20,800 Dividends declared 800 Salaries expense 25,500 Equipment 98,600 Salaries payable 700 Held for trading...
Which of the following statements best describes the political control of the Federal Reserve? Use letters...
Which of the following statements best describes the political control of the Federal Reserve? Use letters in alphabetical order to select options A Policy decisions of the Fed do not require congressional approval, and the president cannot ask for the resignation of a Federal Reserve governor as the president can with cabinet positions. B Policy decisions of the Fed do not require congressional approval, and the president can ask for the resignation of a Federal Reserve governor as the president...
Which of the following are true of lymphatic vessels valves? They are one-way valves very much...
Which of the following are true of lymphatic vessels valves? They are one-way valves very much like valves in veins. They act as capillary sphincters to control the rate of lymph flow. c.   They are similar to the bicuspid valve.       d.  They open to the interstitial fluid.
The following data, presented in alphabetical order, are taken from the records of Crane Corporation. Accounts...
The following data, presented in alphabetical order, are taken from the records of Crane Corporation. Accounts payable $239,200 Accounts receivable 139,200 Accumulated depreciation—buildings 179,600 Accumulated depreciation—equipment 52,800 Allowance for doubtful accounts 6,800 Bonds payable (10%, due 2028) 499,700 Buildings 949,500 Cash 41,700 Common stock ($10 par value; 506,600 shares authorized, 149,400 shares issued) 1,494,000 Dividends payable 79,600 Equipment 275,700 Goodwill 200,900 Income taxes payable 119,200 Inventory 170,300 Investment in Mara common stock (30% ownership), at equity 379,400 Investment in Sasse...
The following data, presented in alphabetical order, are taken from the records of Nieto Corporation. Accounts...
The following data, presented in alphabetical order, are taken from the records of Nieto Corporation. Accounts payable $240,000 Accounts receivable 140,100 Accumulated depreciation—buildings 180,400 Accumulated depreciation—equipment 52,000 Allowance for doubtful accounts 5,200 Bonds payable (10%, due 2025) 500,300 Buildings 949,000 Cash 42,200 Common stock ($10 par value; 499,000 shares authorized, 149,100 shares issued) 1,491,000 Dividends payable 79,200 Equipment 275,200 Fair value adjustment—available-for-sale securities (Dr) 7,700 Goodwill 200,000 Income taxes payable 120,300 Inventory 169,900 Investment in Mara common stock (30% ownership),...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT