A Long Straddle

question 80

Multiple Choice

A long straddle

• A) consists of selling and writing an equal number of puts and calls with different strike prices but the same expiration date and the same underlying security.
• B) is a strategy based on the expectation that the price of the underlying security will be relatively constant.
• C) consists of buying a call at one strike price and then writing a call at a higher strike price.
• D) is a strategy that produces profits when the price of the underlying security moves significantly in either direction.

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Definitions:

Bedrock Channels

Channels carved into the underlying bedrock by the erosive action of flowing water, often seen in riverbeds and streambeds.

Water Velocity

The speed at which water flows in a given direction within a stream, river, or other body of water.

Delta

A landform at the mouth of a river where it splits into several outlets, depositing sediment and forming an area often rich in wildlife and agriculture.

Discharge

The volume of fluid passing a point within a given time, commonly used in reference to the flow of rivers and streams.