If an investor expected the price of gold to fall,that individual should consider which of the following strategies? 1.sell a gold call
2)buy a gold call
3)sell a gold put
4)buy a gold put

Question

Quizplus · Accepted Answer

To profit from an expected fall in gold prices, an investor should sell a gold put option (choice 3) or buy a gold put option (choice 4). Selling a gold call option (choice 1) would actually result in losses if the price of gold fell, while buying a gold call option (choice 2) would only be profitable if the price of gold increased. Therefore, the best choices would be 1 and 4, which involve selling a gold call and buying a gold put.

If an Investor Expected the Price of Gold to Fall,that