1) For each of the following investors, recommend an option strategy. Explain your reasoning.

Choose from the following: Bull Spread, Bear Spread, Covered Call, Protective Put, Principal-Protected Note, Butterfly, Straddle, Short Straddle, Strangle, Short Strangle.

a. Someone thinks that the volatility of a stock is lower than the market prices it. They are willing to take significant risk.

b. Someone thinks that the volatility of a stock is lower than the market prices it. They want to limit their downside risk.

c. Someone thinks the price of oil will fall from $80 to $70.

d. Someone owns AAPL stock and thinks the price will continue to rise, but wants to insure against large losses.

2) Consider one of the strategies you didnt recommend from question 1. Decide which other strategy it is closest to in outcome, and explain why an investor might choose one over the other.