A transaction in which an investor holds a position in the spot market and sells a futures contract or writes a call is
A)a gamble
B)a speculative position
C)a hedge
D)a risk-free transaction
E)none of the above

Question

Quizplus · Accepted Answer

This is a hedge. By selling a futures contract or writing a call, the investor is protecting themselves against potential losses in the spot market. This is considered a risk management strategy rather than a speculative position or a gamble. It is not a risk-free transaction, as there is always some degree of risk involved in investing.

A Transaction in Which an Investor Holds a Position in the Spot