Rico Pagano holds the stock of Nosbitzh & Company.Pagano is concerned that over the next 6 months the stock of Nozbitzh & Co.may fall by 20%.To protect the value of his position,Pagano could

Question

Quizplus · Accepted Answer

The best answer is buy a protective put.A protective put would give Pagano downside protection over the next 6 months while still allowing for upside potential.Answer A is not correct because since Pagano already holds the stock it would,he would be selling a covered call.A covered call also would not give downside protection in the amount of the premium received.

Rico Pagano Holds the Stock of Nosbitzh & Company