You Are Long an At-The-Money Straddle on a Stock Index

question 6

Multiple Choice

You are long an at-the-money straddle on a stock index. Which of the following statements is valid?

• A) Your position increases in value if, ceteris paribus, the index rises.
• B) Your position increases in value if, ceteris paribus, the index falls.
• C) Your position increases in value if, ceteris paribus, the volatility of the index rises.
• D) All of the above.

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