You have a share of stock worth $65 and all market indicators point towards an impending fall

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You have a share of stock worth $65 and all market indicators point towards an impending fall in stock prices in the next two to three months' time. A 3-month ATM put option on the stock is available. A 3-month ATM call option on the same stock is also available. Both options cost $3 each.

1 How you can use these options to protect yourself from a loss in stock value without spending your own money?

2.What is the role of margin requirements and clearing houses in reducing credit risk in futures trading ?

Related Book For answer-question

Statistics For Business Decision Making And Analysis

ISBN: 9780134497167

3rd Edition

Authors: Robert A. Stine, Dean Foster

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Posted Date: Feb 19, 2024 01:22 AM

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You have a share of stock worth $65 and all market indicators point towards an impending fall

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Expert Answer:

1 Using Options for Protection To protect yourself from a potential loss in the stock value without spending your own money you can employ a protectiv... View the full answer

Statistics For Business Decision Making And Analysis

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