You expect a sizable jump in the stock price but are not sure of the direction in which the stock will go. Which of the following alternatives would be best?
A) Buy call options.
B) Buy put options.
C) Sell a straddle.
D) Buy a call and delta hedge it.

Question

Quizplus · Accepted Answer

Buying a call and delta hedging it allows you to profit from volatility regardless of the direction of the stock price movement.

You Expect a Sizable Jump in the Stock Price but Are