1.Suppose that you own 8000 shares worth $20 each. Premium is $4. How can put options be used to provide you with insurance against a decline in the value of your holding over the next 4 months. a)...


1.Suppose that you own 8000 shares worth $20 each.  Premium is $4. How can put options be used to provide you with insurance against a decline in the value of your holding over the next 4 months.




a)
What would you do? Buy/sell call/ put options?



b)
How many would you buy/sell call/put options?



c)
Describe your strategy? How are you making money?



Jun 10, 2022
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