You Hold a Straddle on a Stock That You Bought

question 23

Multiple Choice

You hold a straddle on a stock that you bought a month ago and that still has two months to expiry. Assume the options are European. An unexpected increase of $1 in the price of the stock

• A) Will increase the value of your straddle.
• B) Will decrease the value of your straddle.
• C) Will have no effect on the value of your straddle.
• D) Can increase, decrease, or leave unchanged the value of the straddle.

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Definitions:

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.

Countertransference

Occurs when a therapist transfers emotions and reactions onto a client, often influenced by the therapist's own psychological background.

Theta Brain Waves

Brain waves that are typically associated with deep relaxation, meditation, and the stages of light sleep.

Sleep Spindles

are sudden bursts of oscillatory brain activity visible on an EEG that occur during stage 2 of non-REM sleep, associated with memory consolidation and synaptic plasticity.