Travis Owns a Stock That Is Currently Valued at $45

question 34

Multiple Choice

Travis owns a stock that is currently valued at $45.80 a share. He is concerned that the stock price may decline so he just purchased a put option on the stock with an exercise price of $45. Which one of the following terms applies to this strategy?

• A) Put-call parity
• B) Covered call
• C) Protective put
• D) Straddle
• E) Strangle

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Definitions:

Iroquois

A historically powerful northeast Native American confederacy known for their role in trade, warfare, and diplomacy during the colonial period of North America.

Jesuits

Members of the Society of Jesus, a Roman Catholic religious order founded in 1540 focused on education, intellectual research, and missionary work.

Mohawk Territory

A region historically inhabited and governed by the Mohawk people, part of the Iroquois Confederacy in North America.

Colbert

Jean-Baptiste Colbert was a French politician who served as the Minister of Finances of France under King Louis XIV, known for his policies that promoted mercantilism and the development of French industries.