Mick Taylor is portfolio manager of a well-diversified, large-cap U.S. equity fund. Recently, Taylor and his team have been overweight cash, luckily avoiding a large drawdown in the S&P 500. After a near 30% decline in the headline Index, Taylor is feeling more optimistic about U,5. equity prices. However, Taylor notices that implied volatility, derived from the 5&P 500 options chain, remains 3 at abnormally high levels. Hence, Taylor decides to express his bullish views via index options, rather than risking the fund's full cash amount by investing in individual stocks. Taylor also believes the elevated levels of volatility are likely to decline during the next few months. Details on the S&P 500 3-month option chain are shown below. The 5&P 500 Index is currently trading at 2785. The index multiplier is 100.

Strike	$Bid	$Ask	Implied Vol	Delta	Open Intertest
2575	308.4	312.7	.4127	.6955	8,183
2650	253.8	285.2	.3931	.6411	10,264
2785	164.9	167.9	.8510	.5259	2,857
2900	101.6	103.9	.3164	.4073	47,984
3000	58.5	60.7	.2874	.2948	51,659
			Puts
Strike	$Bid	SAsk	Implied Vol	Delta	Open Intertest
2575	104.9	106.9	.4048	- .3019
2650	125.2	127.3	.3840	-.3564	13.023
2785 2900	170.2 221.0	172.8	.3439	1.4745	32,573 2,099
3000	277.6	224.6	.03087	- .5959	47.741
		281.6	1.2785	-.712	48,256

17. Taylor decides to execute a bull spread using puts. Taylor is most likely to?

A. Buy the 2900 strike put and sell the 2650 strike put Buy the 2650 strike put and sell the 2900 strike put

C. Buy the 2900 strike put and sell 3000 strikes put