Question: Rick owns stock in a retailer that he believes is
Rick owns stock in a retailer that he believes is highly undervalued. Rick expects that the stock will increase in value nicely over the long term. He is concerned, however, that the entire retail industry may fall out of favor with investors as some larger companies report falling sales. There are no options traded on his stock, but Rick would like to hedge against his fears about retail. He locates a symbol RTH, which is a Retail HOLDRS. Can Rick hedge against the risk he is concerned with by using RTH? Using options?
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