The practice of using options or dynamic hedging strategies to provide protection against investment losses while maintaining upside potential is called ________.
A) trading on gamma
B) index optioning
C) portfolio insurance
D) index arbitrage

Question

Quizplus · Accepted Answer

The practice of using options or dynamic hedging strategies to provide protection against investment losses while maintaining upside potential is known as portfolio insurance. This technique is commonly used by investors to minimize potential losses caused by fluctuating market conditions while still allowing for potential gains. Trading on gamma, index optioning, and index arbitrage are all related to options trading but do not specifically involve protection against investment losses.

The Practice of Using Options or Dynamic Hedging Strategies to Provide