Question
Ken is a pessimist of sorts and has a strong belief that the US market is wildly overvalued currently, and that no vaccine for the
Ken is a pessimist of sorts and has a strong belief that the US market is wildly overvalued currently, and that no vaccine for the virus will prove to be effective. Because of this, he wants to bet very strongly and aggressively (gaining as much personal potential upside as possible) on a US stock market collapse by trading the S&P 500 via the SPY EFT. Which of the below trades for Ken makes the most sense given his strong beliefs?
A: Buy calls on the SPY with a strike price of $450 expiring on Dec 31, 2022.
B: Sell calls on the SPY with a strick price of $450 expiring on Dec 31, 2022
C: Buy puts on the SPY with a strike price of $280 expiring on Dec 31, 2022.
D: Sell puts on the SPY with a strike price of $280 expiring on Dec 31, 2022
E. Buy the Spy ETF and buy the $280 out expiring on Dec 31, 2022
F. Short sell the SPY ETF and sell the $50 call expiring on Dec 31, 2022.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started