Question

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

Answer 1

The strategies that will be recommended to John are Long a call and Long bull Spread.

Explanation

Long Call option gives the buyer a right to buy the underlying at a specified price on the specified date in future.When the underlying price increases the call option price also increases and gives the buyer a good amount of profit with the low investment.

The long bull call spread consist of combination of options which include one long call with a lower strike price and one short call with higher strike price. This Lowers the cost of strategy but also limits the profit and loss amount for the strategy.