6. To create a portfolio insurance by hedging against a decrease in the S&P index

(SPX), hedgers should:

a. Long Put options on the SPX

b. Long Call options on the SPX

c. Short Put options on the SPX

d. None of the above

7. A Bear Call Spread is useful when speculators predict:

a. An increase in the price of the underlying

b. A decrease in the price of the underlying

c. No change in the price of the underlying

d. None of the above

8. A Bear Put Spread is useful when speculators predict:

a. An increase in the price of the underlying

b. A decrease in the price of the underlying

c. No change in the price of the underlying

d. None of the above

9. When speculators predict that the price of TSLA stock is going to change volatilely in

either direction, they should consider:

a. Long Butterfly Spread on TSLA

b. Long Condor Spread on TSLA

c. Long Straddle on TSLA

d. None of the above

10. When speculators predict that the price of TSLA stock is stable with limited

movement, they should consider:

a. Long Butterfly Spread on TSLA

b. Long Strangle on TSLA

c. Long Straddle on TSLA

d. None of the above