Suppose your wealthy Aunt Minnie has asked you to manage her large stock portfolio. You would
like to buy and/or sell options on many of the stocks she owns. Describe the types of options you
would buy or sell, as well as your rationale, given the following circumstances:
A. Aunt Minnie owns 10,000 shares of IBM common stock. You believe it is going to fall in price, but
she won't let you sell it because her late husband told her never to let it go. How do you protect her
from the impending price decline?
B. Your analysis suggests that the common stock of Jet-Electro is poised to increase in value
sharply over the next year. Aunt Minnie doesn't want to buy any of the stock, but does want you to
use options to proﬁt if the price rises. What do you do?
C. Although Aunt Minnie doesn't want you sell any of the stocks she owns, she would like you to
use options to generate a little extra income. How might you do this?

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The Answer of Suppose your wealthy Aunt Minnie has asked you to manage her large stock portfolio. You would
like to buy and/or sell options on many of the stocks she owns. Describe the types of options you
would buy or sell, as well as your rationale, given the following circumstances:
A. Aunt Minnie owns 10,000 shares of IBM common stock. You believe it is going to fall in price, but
she won't let you sell it because her late husband told her never to let it go. How do you protect her
from the impending price decline?
B. Your analysis suggests that the common stock of Jet-Electro is poised to increase in value
sharply over the next year. Aunt Minnie doesn't want to buy any of the stock, but does want you to
use options to proﬁt if the price rises. What do you do?
C. Although Aunt Minnie doesn't want you sell any of the stocks she owns, she would like you to
use options to generate a little extra income. How might you do this?

Suppose Your Wealthy Aunt Minnie Has Asked You to Manage