Question

A trader wants to gain a profit by expecting a significant move in either direction of the underlying stock. Which strategy best aligns to this goal?

Answer 1

The best strategy for this trader, who wants to profit from either direction of the underlying stock, is A. Long Put and C. Short Call.

In securities trading, a call option gives the trader the right to purchase underlying security without any obligation.  On the other hand, a put option grants the trader the right to sell the underlying security without any obligation.

Thus, the trader will profit by using options A and C.

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