If You Expect Stock Volatility to Rise but Have No

question 6

Multiple Choice

If you expect stock volatility to rise but have no particular view of direction, then you should

• A) Sell stock now.
• B) Sell call options.
• C) Buy put options.
• D) All of the above.

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Definitions:

Spotlight Effect

Overestimating others’ noticing and evaluating our appearance, performance, and blunders (as if we presume a spotlight shines on us).

Self-serving Bias

A common tendency to attribute positive events to one's own character but attribute negative events to external factors.

Defensive Self-esteem

A fragile form of self-esteem that is highly sensitive to perceived threats and criticism, often leading to aggressive or defensive reactions to protect self-worth.

Social-cognitive

Pertaining to the understanding of social interactions and processes through cognitive mechanisms, including thoughts, perceptions, and expectations.