What happens if you sell short calls and they become deep in-the-money? A. You risk being assigned to buy the stock. B. Your broker may tell you to immediately cover your short calls. C. You risk assignment any time your short calls are deep in-the-money prior to expiration. D. You can just buy an equal number of puts to cover your short calls.
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What happens if you sell short calls and they become deep in-the-money?
A. You risk being assigned to buy the stock.
B. Your broker may tell you to immediately cover your short calls.
C. You risk assignment any time your short calls are deep in-the-money prior to expiration.
D. You can just buy an equal number of puts to cover your short calls.
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- An arrangement with a broker to borrow stocks from them and then sell it in the market, with the hope that they earn a profit by buying the stock back again after it has fallen in price is called Select one: a. smart money. Ob. short sales. Oc. behavioral finance. Od. random walk.Some speculators think you should buy stock which are heavily shorted. Their reasoning is: a. The more a stock is shorted, the more that needs to be bought to close the short positions. b. The more a stock is shorted, the more speculators will have to sell in the future. c. the crowd is always right.Which strategy would be best for Kelly to deploy if she thinks the stock market will decline and she wants to protect the downside, while maintaining any upside if she is wrong about the market situation: a Protective puts b Covered calls c Zero-cost collars
- Short selling a. What does it mean to short sell a security? b. What is the risk associated with short selling. c. When should an investor short sell? d. How can investors sell stocks they do not own? e. How is a short position closed?1. If a floating-rate investor is low on cash, what is one way to buy a floor to ensure they receive some form of payment if rates drop?Use an internet search or a generative Al site to answer the following questions. Be sure to cite your sources. You must post then comment on someone else's post. 1. What does it mean to have a long position in a stock? 2. What does it mean to have a short position in a stock? 3. Why is a short position risky? 4. Which kind of trade is sure to execute limit order or market order and why?
- You own Honeywell stock, and are worried that its price will fall. You are considering "insuring" yourself against this possibility. How can your provide such protection? (Choose the best answer below.) A. To protect against Honeywell's stock price dropping, you can buy a put with Honeywell as the underlying asset. B. To protect against Honeywell's stock price dropping, you can sell a call with Honeywell as the underlying asset. C. To protect against Honeywell's stock price dropping, you can buy a call with Honeywell as the underlying asset. D. To protect against Honeywell's stock price dropping, you can sell a put with Honeywell as the underlying asset.Which of the following statements are NOT problems a typical large investor faces? In order to complete large transactions, they may need to accept higher transaction costs or slower time until completion. If large investors want to trade large amounts of stock without affecting the stock price and while remaining anonymous, they may use a dark pool. If they make a large transaction, they may not receive the best price for those financial securities. Large investors trades are usually executed significantly slower than small investors trades.Which of the following is a reason why an investor would place a stop buy order on a stock? To ensure a short position is closed out for profit To ensure that the broker executes immediately at the current market price To ensure the stock is sold before its price falls to a specified level To ensure the stock is purchased when its price is rising
- If a Put with strike X cannot be purchased in the market, what can you do to re-create or Buy a call, buy a stock and short X/(1+r) t-bills Buy a call, buy a stock and buy X/(1+r)' t-bills Buy a call, short a stock and short X/(1+r) t-bills O Short a call, short a stock and buy X/(1+r)' t-bills Buy a call, short a stock and buy X/(1+r)' t-bills Short a call, buy a stock and short X/(1+r)' t-bills Short a call, buy a stock and buy X/(1+r)' t-bills Short a call, short a stock and short X/(1+r)' t-billsJill Davis tells her broker that she does not want to sell her stocks that are below the price she paid for them. She believes that if she just holds on to them a little longer they will recover, at which time she will sell them. Which behavioral characteristic is the basis for Davis’s decision making?a. Loss aversion.b. Conservatism.c. Representativeness.Which is correct about security valuation? A. In an efficient market, several factors would affect the market and value is not necessarily equals the price. B. The value of the security is determined to compare it with the current market price and usually investor would buy when the value equals the price. C. Sellers would prefer the accept lower bid price than higher bid price to realize gains. D. Investors buy securities when securities are underpriced and sell them when it is overpriced. E. All of the above F. None of the above