Answer: d. bearish spread
Explanation:
With a bearish spread, the investor believes the market to be heading for a price decline in the stock of interest. They will therefore purchase a put option on it. However, they also want to reduce the cost of the transaction so what they will do is to simultaneously buy 2 put options for the same asset for the same date of expiration but with different exercise prices.
If the price of the stock then falls, they will make a profit on both aand reduce costs.
