Series 7 - General Securities Representative Exam
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An investor wants to buy JKL stock (currently trading at $50) but doesn't want to pay the current price. The investor only wants to buy it at a lower price. and is not in any hurry to buy it, might employ which of the following strategies?
Buy the stock and sell a higher priced call
A
Write a 55 call
B
Write a 45 put
C
Buy a 47.50 put
D
Explanations
The investor would sell (write) the 45 put. If the price goes does not decrease through 45, she will keep the premium collected. If it does go below 45, she may be assigned and then result in owning 100 shares at 45.00.