The option strategy where the holder of a long position in a stock buys a put with an exercise price lower than the current stock price and sells a call with an exercise price higher than the current stock price is known as
A)box
B)bear strategy
C)bull strategy
D)collar
E)spread

Question

Quizplus · Accepted Answer

The option strategy described is a collar. It is commonly used to limit the potential downside risk of a long position in a stock by buying a put option and financing the cost by selling a call option. The put option provides protection against a decline in the stock price, while the call option helps to offset the cost of the put option.

The Option Strategy Where the Holder of a Long Position