Question: Avalon Corporation has beeb developing a new product for the past 5 years and the product is coming out next month. It is not clear

Avalon Corporation has beeb developing a new product for the past 5 years and the product is coming out next month. It is not clear whether the product will succeed or fail, however you believe the success or failure of the product will have a very dramatic impact on the price of the company. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price's future movement?

A.

Buy a straddle

B.

Buy a call.

C.

Write a covered call.

D.

Buy a put.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!