An article in the New York Times described how federal prosecutors accused a money manager of swindling his friends, family, and other investors out of $40 million. The article described the money manager as losing all the funds entrusted to him in “aggressive bearish options trades.”
a. What is the difference between a bearish financial investment and a bullish financial investment?
b. To make these bearish trades, was the money manager buying put options or buying call options? Briefly explain.