SIE practice questionmediumStraddles
An investor expects high volatility but is unsure of direction. Which is the most appropriate options strategy?
- ABuy a protective put
- BSell a covered call
- CBuy a straddle✓ Correct answer
- DSell a naked call
Explanation
Why C — Buy a straddle
Straddles profit by large moves in either direction. Selling covered calls or buying puts prepares for different scenarios, not volatility.
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