Series 7 - General Securities Representative Exam
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A trader is bullish on OPQR stock. He wants to make a bullish directional play; but the stock is trading around $745 per share. He feels the price may increase quickly from here, but does not have enough capital to buy 100 shares of stock. What strategy might the trader consider?
Sell Puts
A
Buy Put and Sell Lower Strike Price Put
B
Sell Strangle
C
Buy Calls
D
Explanations
The trader wants to participate in the upside with a small outlay of capital. The only bullish strategies here are sell puts or buy calls. Since selling puts has large margin requirements (large capital outlay), the best choice is to buy calls