Series 7 practice questionmediumOptions — Bearish Strategies
Which of the following represents a bearish options strategy?
- ALong put✓ Correct answer
- BShort put
- CLong call
- DBull call spread
Explanation
Why A — Long put
A long put is a bearish strategy because the investor profits when the underlying stock price declines. The put increases in value as the stock drops below the strike price. Other bearish strategies include bear call spreads and bear put spreads. Short puts and long calls are bullish positions.
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