Assume That an Investor Is Currently Holding a Reverse Straddle

question 3

Multiple Choice

Assume that an investor is currently holding a reverse straddle position (i.e.a short put and short call) ,which is currently a profitable investment.All else being equal,what would this investor like to happen to vega?

• A) Decrease
• B) Increase
• C) Stay constant
• D) Indifferent

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Definitions:

Judgment

The ability to make considered decisions or come to sensible conclusions.

Obedience

The act of following orders or directives from authority figures, often studied in psychology in terms of social influence and authority.

Direct Order

denotes an explicit command given by a superior or authority figure, requiring immediate compliance without question.

Behavior Change

A modification in human behavior that can result from practice, external influences, or internal efforts.