An investor believes that the price of a stock,say IBM's shares,will increase in the next 60 days.If the investor is correct,which combination of the following investment strategies will show a profit in all the choices? (i)buy the stock and hold it for 60 days
(ii)buy a put option
(iii)sell (write)a call option
(iv)buy a call option
(v)sell (write)a put option
A)(i),(ii),and (iii)
B)(i),(ii),and (iv)
C)(i),(iv),and (v)
D)(ii)and (iii)

Question

Quizplus · Accepted Answer

(i) Buying and holding the stock will profit if its price increases. (iv) Buying a call option will profit as it gives the right to buy the stock at a lower price than the market value if the stock's price increases. (v) Selling a put option will profit because the option will likely expire worthless if the stock's price rises, allowing the seller to keep the premium.

An Investor Believes That the Price of a Stock,say IBM's