Question

Suppose trader John is Moderate bullish on the market, which trading strategy (or strategies) will you...

Suppose trader John is Moderate bullish on the market, which trading strategy (or strategies) will you recommend to him?

Long a butterfly

Long a call

Long a bull spread

Short a call

Short a butterfly
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Correct answer: Long a bull spread

Long a bull spread is a option strategy for moderate bullish market view. In case of Long bull spread buy a call option and simultaneously sell a call option.

Other option strategy and its market view:

Short a butterfly: Neutral market view

Short a call: Bearish market view

Long a call: Very Bullish market view

Long a butterfly: Neutral market view

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose trader John is Moderate bullish on the market, which trading strategy (or strategies) will you...
Suppose trader John is Moderate bullish on the market, which trading strategy (or strategies) will you recommend to him? Short a butterfly Long a call Long a bull spread Long a butterfly Short a call
Graphing Trading Strategies: This problem asks you to graph profit diagrams for several trading strategies. Compute...
Graphing Trading Strategies: This problem asks you to graph profit diagrams for several trading strategies. Compute the profit of the strategy at maturity with respect to different realizations of the stock price in the future and plot the profit diagram (stock price on x-axis; profit on y-axis) of the strategy. a. Buying a Straddle: Buy a call with an exercise price of $20 for a price of $2.65 and buy a put with an exercise price of $20 for $1.85....
Suppose a stock is trading at $4 in July. An options trader executes a spread by...
Suppose a stock is trading at $4 in July. An options trader executes a spread by selling an August put with strike $30 for $50, buying an August put with strike $40 for $300, buying an August call with strike $40 for $300 and selling an August call with strike 50 for $50. Write the payoff function of the spread and provide the corresponding diagram. Write a paragraph discussing if the spread provides a limited/unlimited profit potential and possible corresponding...
Question Number 1 Due to the bullish trend of the market in underlying stock of option...
Question Number 1 Due to the bullish trend of the market in underlying stock of option which is trading at $75. Based on the market estimate you opt for one call option with strike price of $70 and selling at $7.5, and one short call option with a strike price of $80 and selling at $3. The expiration on both cases is 6 months. A. What strategy you have adopted under this scenario explain? B. Determine the position value at...
A trader uses delta hedging strategy to hedge a portfolio of short positions in call option...
A trader uses delta hedging strategy to hedge a portfolio of short positions in call option on Apple Computer stocks. The trader sells 50 call option contracts (1 contract controls 100 shares) on Apple stock. The option price is $5, the stock price is $230, and the option’s delta is 0.8. a. Does the trade short or long the stock to create a delta-neutral position? (Sample answer: long; or short) b. How many shares does the trader need to create...
You work as a trader for an equity fund. On the first trading day of 2008,...
You work as a trader for an equity fund. On the first trading day of 2008, you are concerned that your long position (1,000 stocks) in a large company in the U.S equity market is subject to significant downside risks for the year, as some potentially negative news could result in market crashes. However, you have no plans to liquidate your long position until the end of 2008. a) Devise a strategy involving taking long positions in options to help...
Suppose you expect the stock price to move signifificantly next month, but you are not sure...
Suppose you expect the stock price to move signifificantly next month, but you are not sure of the direction of the movement, which of the following option trading strategies you may want to implement? Please select ALL appropriate trading strategies. No partial points will be given for this question. A. Protective Put B. Covered call C. Bull spreads D. Bear spreads E. Straddle F. Strangle
Which 1-yr option strategy will give the highest expected net profit if you are confident that...
Which 1-yr option strategy will give the highest expected net profit if you are confident that the underlying stock price will be less volatile over the next year than what the market prices reflect? (Please explain) A. Long put and long call B. Short put and short call C. Long put and short call D. Short put and long cal
You are bullish on Amazon's stock (AMZN) which is currently selling for $1596.50. You have decided...
You are bullish on Amazon's stock (AMZN) which is currently selling for $1596.50. You have decided to buy a 6-month call option with a strike price of $1,625. It costs $50.60 per share to buy the option. Assume the 6-month risk-free rate is 1% per annum with continuous compounding. a. Draw the profit and payoff function for the long call option at expiration. (Provide labels for the axes and label a point on the functions above, below and at the...
Suppose you sell short Apple.Inc which is currently trading at $100 per share. You put $20,000...
Suppose you sell short Apple.Inc which is currently trading at $100 per share. You put $20,000 as cash into your brokerage account with an initial margin of 50%. The maintenance margin is 25%. a. How many shares of Apple can you sell short? (8 pts) b. How far can the stock price increase before you get a margin call? (12 pts)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT