Question $2$

From a financial planning perspective, what is the most significant drawback of hedging with options in anticipation of extreme market volatility? Choose the correct option.

The cost of hedging with options can erode potential returns if market volatility does not materialise as expected.

Options can create excessive protection, leading to missed upside potential in the event of a market recovery.

There is a risk of misjudging the timing or magnitude of market movements, resulting in significant losses.

The client may miss the benefits of a bull market if the timing is wrong

None of the options is correct.

All of the options are correct.