Question
Suppose that you buy 100 shares of Amazon stock. You think the stock is ready to climb back up to $3,300 a share, however you
Suppose that you buy 100 shares of Amazon stock. You think the stock is ready to climb back up to $3,300 a share, however you are worried since this is such a big investment. You want to limit your losses. Which of the following strategies would best accomplish this?
| A. | Buy a call on Amazon - You will be able to sell at the strike price, so the strike price becomes your floor. You cannot lose more than that. | |
| B. | Sell a call on Amazon - You will be able to buy at the strike price, so the strike price becomes your floor. You cannot lose more than that. | |
| C. | Buy a put on Amazon - You will be able to sell at the strike price, so the strike price becomes your floor. You cannot lose more than that. | |
| D. | Sell a put on Amazon - You will be able to buy at the strike price, so the strike price becomes your floor. You cannot lose more than that. |
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Personal Finance
Authors: Jack Kapoor
12th Edition
125996776X, 9781259967764
