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An expiring put option will be exercised and the stock will be sold if the stock price is below the exercise price. A stop-loss order
An expiring put option will be exercised and the stock will be sold if the stock price is below the exercise price. A stop-loss order causes a stock sale when the price falls below some limit. Compare and contrast the strategy of buying a put option to the strategy of issuing a stop loss order.
(Hint: assume you own 100 shares of stock. Consider the payoff to each strategy for different prices. Don't forget the cost of implementing the strategy.)
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