SIE practice questionmediumStraddles
A customer buys 1 ABC May 50 call and 1 ABC May 50 put. This position is called a:
- ASpread
- BStraddle✓ Correct answer
- CCovered call
- DProtective put
Explanation
Why B — Straddle
Buying a call and a put with the same strike and expiration is a straddle, which benefits from volatility. The other choices describe different option strategies.
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