Aline Nues is a junior analyst in the derivatives research division of an international securities firm. Nuess supervisor, Ctia Pereira, asks her to conduct an analysis of various options trading strategies relating to shares of three companies: IZD, QWY, and XDF. Over the past few months, Nues and Pereira have followed news reports on a proposed merger between XDF and one of its competitors. A government antitrust committee is currently reviewing the potential merger. Pereira expects the share price to move sharply up or down depending on whether the committee decides to approve or reject the merger next week. The option trade that Nues should recommend relating to the government committees decision is a __________.

Select one alternative:

Covered call

Protective put

Bull spread

Long strangle