The most important benefit of an options contract strategy for a hedger is:

Question

Quizplus · Accepted Answer

The most important benefit of an options contract strategy for a hedger is that the risk of loss from unfavourable price movements is limited. This is because options provide the right, but not the obligation, to buy or sell a specific asset at a predetermined price, known as the strike price. This limits the potential loss to the premium paid for the option, providing a level of protection for the hedger. The other options listed (A, C, and D) are benefits to the writer or seller of the option, not the hedger.

The Most Important Benefit of an Options Contract Strategy for a Hedger