An investor has short 1000 shares of Herbalife and their value has fallen signif

Question

An investor has short 1000 shares of Herbalife and their value has fallen significantly . The best single option position to protect this profit from a very significant increase in the stock price during the upcoming month would be to 1 sell call options in 1000 shares 2- buy call options 3sort sell an additional 1000 shares 4- buy put option 5 sell put option
An investor has short 1000 shares of Herbalife and their value has fallen significantly . The best single option position to protect this profit from a very significant increase in the stock price during the upcoming month would be to 1 sell call options in 1000 shares 2- buy call options 3sort sell an additional 1000 shares 4- buy put option 5 sell put option
1 sell call options in 1000 shares 2- buy call options 3sort sell an additional 1000 shares 4- buy put option 5 sell put option

Explanation / Answer

correct option Buy call option

Since you have short the shares ,you have to take opposite position by buying call option .

so loss due to increase in price in case of short sell will be offset by profit on call option

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.