Which of the following transactions does not profit in a strong bull market.
A)a short put
B)a covered call
C)a protective put
D)a synthetic call
E)none of the above

Question

Quizplus · Accepted Answer

A strong bull market is characterized by rising stock prices. In such a market, the value of put options decreases, as the likelihood of the underlying stock price falling below the strike price decreases. Therefore, a short put, which profits from a decrease in the underlying stock price, will not profit in a strong bull market.

Which of the Following Transactions Does Not Profit in a Strong