If you expect the price of a stock to decrease and its volatility to increase, then the most appropriate strategy to use is a

Question

Quizplus · Accepted Answer

A long put option gives the holder the right, but not the obligation, to sell the stock at a specified price (strike price) within a specific period of time. If the stock price decreases, the option becomes more valuable, and the holder can sell the stock at the higher strike price. Additionally, if volatility increases, it tends to increase the option's value as well, making it even more profitable for the holder. Therefore, a long put option is an appropriate strategy to use when expecting a decrease in stock price and an increase in volatility.

If You Expect the Price of a Stock to Decrease