You Own Shares of a Stock and Believe the Stock

question 32

Multiple Choice

You own shares of a stock and believe the stock price will increase in the future. However, you realize the stock price could decline and want to hedge that risk. Which one of the following option positions should you take to create the desired hedge?

• A) Buy a call
• B) Sell a call
• C) Buy a put
• D) Sell a put
• E) No option position will create the desired hedge.

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Definitions:

Respiration

The biochemical process by which living organisms exchange gases with their environment, typically involving the intake of oxygen and the release of carbon dioxide.

Tissues

Groups of similar cells in organisms that work together to perform specific functions.

Respiratory System

The organ system that facilitates breathing, including the lungs, airways, and muscles, enabling the exchange of oxygen and carbon dioxide.

Tuberculosis

A contagious bacterial infection caused by Mycobacterium tuberculosis, primarily affecting the lungs but can spread to other organs.