Series 7 - General Securities Representative Exam
Your new client is short 1,000 shares of PQRS stock. He feels strongly that it will decline in the future, but is concerned about a short term price spike from an earnings release. Which strategy do you suggest for your new client?
Buy 10 PQRS callsA
Buy 1 PQRS callB
Sell 10 PQRS putsC
Sell 1 PQRS CallD
Each option contract covers 100 shares. He needs to buy 10 calls to hedge his 1000 share position.