Question
Your customer owns 500 common shares of Seabird Airlines (ticker: SBRD). He purchased the shares three years ago at $45 a share. Seabird is currently
Your customer owns 500 common shares of Seabird Airlines (ticker: SBRD). He purchased the shares three years ago at $45 a share. Seabird is currently trading at $92 a share. The customer is concerned that a recent drop in airline travel will negatively impact the price of the stock. However, he does not want to sell the shares as he believes the company's long-term prospects are good. What would you recommend to the customer?
A) Buy 5 SBRD 90 calls
B) Sell 5 SBRD 95 puts
C) Buy 5 SBRD 90 puts
D) Sell 5 SBRD 95 calls
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Answers The correct option is C Buy 5 SBRD 90 puts Reason Since the customer already owns 500 common ...Get Instant Access to Expert-Tailored Solutions
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Introduces Quantitative Finance
Authors: Paul Wilmott
2nd edition
470319585, 470319581, 978-0470319581
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