We buy common shares for $20 a share. In order to protect our position, we may invest in options.


We may buy (or sell) put options at $1 premium for an exercise price of $22 with an expiration of six months. We also may invest in call options, which cost 1.5 with the same expiration date. What should we do if we predict the stock market will crash?

Answer rating: 100% (QA)

Put option gives its buyer right to sell underlying at specified price on spec... View the full answer