If an investor with a somewhat bearish attitude owns some shares but does not as yet want to sell,then they can limit their downside exposure to a price fall by:

Question

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Writing a call option on the shares will generate income and provide a cushion against price declines. It is a limited risk strategy as the maximum loss is known in advance. The other options such as vertical bull spread, call bull spread, and put bear spread involve buying and selling options, which can lead to higher risk and potentially unlimited losses.

If an Investor with a Somewhat Bearish Attitude Owns Some