You want to buy 100 shares of XYZ stock, and you don't want to pay more than $20 per share for it. Which option strategy would be the least expensive?

Use letters in alphabetical order to select options

1. A Buy one XYZ 20 call for $2.

2. B Sell one XYZ 20 call for $4.

3. C Buy one XYZ 20 put for $1.

4. D Sell one XYZ 20 put for $3.

You want to set up a covered call position on 1,000 shares of XYZ stock. Your goal is to collect the greatest premium, and you don't mind being assigned. Which of these would you probably do if XYZ were trading for $40 per share?

Use letters in alphabetical order to select options

1. A Buy 10 calls on XYZ stock with a strike price of $25.

2. B Sell 10 calls on XYZ stock with a strike price of $30.

3. C Sell 10 calls on XYZ stock with a strike price of $45.

4. D Sell 10 puts on XYZ stock with a strike price of $50.

You sell to open ten ABC 40 puts for $2 each. What's the best thing that can happen now?

Use letters in alphabetical order to select options

1. A ABC stock stays at $40, and the puts expire worthless.

2. B ABC stock stays at $40, and you buy back the puts for a profit.

3. C ABC's price rises to $50, and you're assigned to buy the stock at $40 per share.

4. D ABC stock falls to $30, and you exercise the puts to sell the stock at $40 per share.