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Consider the following table of positions consistent with differing views on the price and volatility of an asset: Price will fall No price view Price
Consider the following table of positions consistent with differing views on the price and volatility of an asset: Price will fall No price view Price will increase Volatility Will Increase No Volatility View Volatility Will Decrease x Y z Buy straddle Do nothing Sell straddle Buy calls Buy underlying Sell puts Determine which of the following positions for X, Y, and Z best fit the table above. A X = sell calls; Y = buy underlying; Z = buy puts B X = buy calls; Y = short underlying; Z = buy puts X = buy puts; Y = short underlying; Z = sell calls D X = buy puts; Y = buy underlying; Z = sell calls E X = sell puts; Y = short underlying; Z = buy calls
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