YOU PURCHASED 1000 SHARES OF XYZ AT $91 EACH. NOW THE STOCK IS SELLING FOR $75....

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YOU PURCHASED 1000 SHARES OF XYZ AT $91 EACH. NOW THE STOCK IS SELLING FOR $75. YOU DO EXPECT SOME RECOVERY IN THE STOCK BUT NOT ALL THE WAY. WHAT DO YOU DO TO "REPAIR" THIS POSITION IF THE FOLLOWING CALL OPTIONS ARE AVAILABLE: MAR 75 @ $ 1/2 MAR 85 @ $ 1/4 COMPARE THE RESULTS OF THE "REPAIRED" AND "UNREPAIRED" POSITIONS. YOU PURCHASED 1000 SHARES OF XYZ AT $91 EACH. NOW THE STOCK IS SELLING FOR $75. YOU DO EXPECT SOME RECOVERY IN THE STOCK BUT NOT ALL THE WAY. WHAT DO YOU DO TO "REPAIR" THIS POSITION IF THE FOLLOWING CALL OPTIONS ARE AVAILABLE: MAR 75 @ $ 1/2 MAR 85 @ $ 1/4 COMPARE THE RESULTS OF THE "REPAIRED" AND "UNREPAIRED" POSITIONS.

Answer rating: 100% (QA)

To repair the position in XYZ stock you can consider using call options to mitigate the potential losses or enhance potential gains Lets compare the r... View the full answer