You are a portfolio manager who uses options positions to customize the risk profile of your clients. In each case, what strategy is best given your client’s objective?

a. • Performance to date: Up 16%.

• Client objective: Earn at least 15%.

• Your forecast: Good chance of major market movements, either up or down, between now and end of the year.

i. Long straddle ii. Long bullish spread iii. Short straddle

b. • Performance to date: Up 16%.
• Client objective: Earn at least 15%.
• Your forecast: Good chance of a major market decline between now and end of year.
i. Long put options ii. Short call options iii. Long call options?  P-639