You are a portfolio manager who uses options positions to customize the risk profile of your clients. In each case, what strategy is best given your client’s objective?
a. • Performance to date: Up 16%.
• Client objective: Earn at least 15%.
• Your scenario: Good chance of large gains or large losses between now and end of year.
i. Long straddle.
ii. Long bullish spread.
iii. Short straddle.
b. • Performance to date: Up 16%.
• Client objective: Earn at least 15%.
• Your scenario: Good chance of large losses between now and end of year.
i. Long put options.
ii. Short call options.
iii. Long call options.