Which of the following can be used to protect against a loss on a stock owned by an investor?
A) Naked calls.
B) Protective puts.
C) Covered calls.
D) Straddles.
E) Naked puts.

Question

Which of the following can be used to protect against a loss on a stock owned by an investor?
A) Naked calls.
B) Protective puts.
C) Covered calls.
D) Straddles.
E) Naked puts.

Quizplus · Accepted Answer

Protective puts can be used to protect against a loss on a stock owned by an investor. A protective put involves purchasing a put option on the stock, which gives the investor the right to sell the stock at a specific price (strike price) for a certain period of time. If the stock price drops, the investor can exercise the put option and sell the stock at the higher strike price, limiting their losses.

Which of the Following Can Be Used to Protect Against