Which of the follow options strategies are consistent in their belief about the future behavior of the underlying asset price?
A)Selling calls and selling puts
B)Buying calls and buying puts
C)Buying calls and selling puts
D)None of the above

Question

Quizplus · Accepted Answer

Buying calls and selling puts are both bullish strategies as they both profit from an increase in the underlying asset's price. Therefore, choosing these strategies together is consistent in their belief that the asset price will increase in the future. Selling calls and selling puts are both bearish strategies as they profit from a decrease in the underlying asset's price, so choosing these strategies together is also consistent in their belief that the asset price will go down in the future. Buying calls and buying puts are not necessarily consistent as they are both directional strategies (bullish and bearish, respectively) and could indicate conflicting beliefs about the asset's future direction.

Which of the Follow Options Strategies Are Consistent in Their