SIE practice questioneasyProtective puts
An investor owns 100 shares of XYZ and buys a put. Which strategy is this?
- AShort straddle
- BCovered call
- CNaked put
- DProtective put✓ Correct answer
Explanation
Why D — Protective put
Owning stock and buying a put is a protective put, limiting downside risk. Covered calls involve selling calls, naked puts involve only puts, and straddles use calls and puts.
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