Which of the following strategies makes a profit when the stock price declines and loses money when the stock price increases?
A. Long call and short put
B. Long call and long put
C. Short call and short put
D. Short call and long put

Respuesta :

Option D. Short call and long put is the following strategies makes a profit when the stock price declines and loses money when the stock price increases. Option d is the correct option of the given statement.

What exactly are short calls and long puts?

Accordingly, purchasing a call option or a put option is referred to as a long call position and vice versa. The term "Short" also refers to each time you sell an option. Accordingly, selling a call option and selling a put option are also known as short positions for the call and put, respectively.

How do long calls and long puts differ from one another?

Long calls and long puts are the two different forms of long options. A long call option allows you to purchase, or "call," shares of a certain stock at a predetermined price at a later time. In contrast, a long put option allows you to sell, or put, shares of that stock at a future date for a predetermined price.

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