If you have an asset that you will be selling during the next two weeks, then you might be able to hedge the proceeds from the asset sale by:
A) purchasing a call option on the asset.
B) purchasing a put option on the asset.
C) purchasing more of the asset.
D) none of the above.

Question

Quizplus · Accepted Answer

Purchasing a put option on the asset allows you to protect the value of the asset in case its price falls before you sell it. This way, you can sell the asset at the previously agreed upon strike price of the put option, which will protect the value of the asset and the proceeds from the sale. Purchasing a call option would not be ideal, as it would only benefit you if the price of the asset increased, which may not happen within the next two weeks. Purchasing more of the asset is not a hedge, as it increases your exposure to the asset rather than reducing it.

If You Have an Asset That You Will Be Selling