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18. Which of the following statements is not correct? A. A protective put requires holding the underlying security. B. A protective put on Amazon stock
18. Which of the following statements is not correct? A. A protective put requires holding the underlying security. B. A protective put on Amazon stock (purchased at $2000) with exercise price of $1900, the maximum gain of this investment is $100. C. A covered call protects the call writer against the scenario that the underlying security price is greater than the exercise price. D. None of the above. 19. Which of the following statements is not correct? A. The profit in a protective put position at maturity is negative if the stock price is below the exercise price. B. The profit in a protective put position at maturity is positive if the stock price is greater than the exercise price. C. Holding a protective put experiences less volatility than holding the underlying security only. D. None of the above. 20. Consider a straddle with exercise price of $100 for both the call and the put. Which of the following is true regarding the straddle? A. Its profit when the stock price is $105 at maturity is the same as its profit when the stock price is $95 at maturity. B. The magnitude of stock price change does not affect the payoff of the straddle. C. The premium of the straddle is call price minus put price. D. None of the above
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