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You are a trader at an options desk for an investment bank. The underlying stock of the options that you trade is priced at $125.94.

You are a trader at an options desk for an investment bank. The underlying stock of the options that you trade is priced at $125.94. Your analysis of the stock's historical volatility leads you to conclude that between now and May expiration (21 days) you expect low volatility, but it could increase. You want to utilize a strategy where you are long and short the same exercise price but different expirations, so you buy 10 of the June 125 call for $13.50 and sell 10 of the May 125 call for $5.75. Which strategy below best describes your position?

a collar

a ratio spread

a calendar spread

a bear call spread

none of the above

Given the position mentioned in question #25, are you long or short on the May/June spread?

Long Short (circle the best answer)

You are a trader at an options desk for an investment bank. The underlying stock of the options you trade is priced at $125.94. You want to gain long vega exposure to your position with July options and use exercise prices as close to where the stock is trading as possible so that it is close to delta-neutral.

(1) Which strategy below best describes your objectives?

buy a box

buy a straddle

buy a ratio spread

buy a collar

buy a bull call spread

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