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As a result of the current COVID-19 pandemic, stock markets around the globe have become volatile. As an investor you perceive that the markets are

As a result of the current COVID-19 pandemic, stock markets around the globe have become volatile. As an investor you perceive that the markets are going to experience significant movements in the near future; however, you are not sure about the direction of such movements. The markets may go up or go down. In such uncertain circumstances, what type of option strategy would you recommend to follow? Explain why. (3 marks)

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Answer In uncertain circumstances where the direction of the stock market movements is unclear a recommended option strategy is the long straddle The ... blur-text-image

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