Which strategy benefits from upside price movement and has some protection should the price of the security fall?
A) Bull spread
B) Long put
C) Short call
D) Straddle

Question

Quizplus · Accepted Answer

A Bull spread strategy benefits from upside price movement as it involves buying a call option at a lower strike price and selling a call option at a higher strike price. This limits the potential losses in case the price falls as the investor has sold a call option at a higher strike price, which partially offsets any losses from the purchased call option. This strategy can provide a potential profit if the price of the security goes up, and some protection in case the price falls. Long put and short call strategies are bearish and will only benefit from falling prices. A straddle is a neutral strategy that benefits from volatility, but it involves buying both a call and a put option at the same strike price, which may not provide the same level of protection against price movements as a bull spread.

Which Strategy Benefits from Upside Price Movement and Has Some