You purchased some stock last month for $50 per share. Today the stock closed at $80 per share. You would like to protect the profit that you have made on this stock but you really don't want to sell it in case it continues to rise in price. What should you do?

Question

Quizplus · Accepted Answer

Placing a stop-loss order on the stock at a price slightly below the current market price, say $75, can help protect the profits made so far while still allowing for potential gains in the future. The stop-loss order would automatically trigger a sale of the stock if the price falls to or below the specified price, thus limiting the potential loss. Choosing A or C would not help protect the profits already made, and choosing D would not provide any solution.

You Purchased Some Stock Last Month for $50 Per Share