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lions [1.4K]
2 years ago
11

An investor sold 100 shares of ran common stock short at $50 per share. the ran is now at $38. the investor is still bearish on

the stock but would like to protect that gain. what would you recommend if this were your client
Business
1 answer:
Anni [7]2 years ago
7 0

If the investor is my client, i will advise him to enter a buy stop order at $40.

<h3>What is the buy stop order?</h3>

In the share market, these are protective tool that are mainly for short sellers.

Now, as the stock should begin to rise from its current price of $38, once it reaches or exceeds $40, a buy order at the market is entered.

Hence, the stock purchased is used to cover the short position and the investor's profit is the $50 sale price minus the cost of the purchase.

However, because the investor is short term person, the only protective order would be a buy and not a sell.

Therefore, i will advise him to enter a buy stop order at $40

Read more about buy stop order

<em>brainly.com/question/14206094</em>

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