An Up-And-Out Put May Be Preferred to a Vanilla Put

question 19

Multiple Choice

An up-and-out put may be preferred to a vanilla put

• A)Because it results in higher payoffs in all circumstances.
• B)Because it sometimes pays off even when the stock price rises whereas the vanilla only pays off when the stock price falls.
• C)By an Investor with strong directional views because it is a cheaper form of taking on a directional bet.
• D)By an investor more concerned with direction than volatility because the down-and-out put always reacts negatively to volatility unlike the vanilla put.

---

Definitions:

Regenerative Cycles

Processes or phenomena wherein systems can restore or rebuild themselves after damage or depletion.

Igbo People

An ethnic group native to Nigeria, known for their rich culture, language, and history.

South-eastern Nigeria

A geographic and cultural region of Nigeria known for its diverse ethnicities, languages, and rich history, including the Igbo people as a significant ethnic group.

Dominant Culture

The cultural practices, values, and norms that are most influential within a particular society or social group.