Amy Bought a $50 May Call and a $50 May

question 83

Multiple Choice

Amy bought a $50 May call and a $50 May put on the same underlying stock. This strategy is referred to as which one of the following?

• A)bull spread
• B)bear spread
• C)parity play
• D)short straddle
• E)long straddle

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Definitions:

Crisis Environments

Situations or settings characterized by instability, danger, or uncertainty, requiring urgent attention and action.

Probabilities

The measure of the likelihood that an event will occur, usually expressed as a number between 0 and 1.

Behavioral Scientists

Researchers who study the actions and behaviors of humans or animals to understand psychological and societal mechanisms.

Classical Decision Theory

A theory that assumes decision-makers have complete information and can rationally evaluate options to make optimal choices.