Investment VehiclesQuestion 83 of 100
A put option is generally used by an investor who:
a.Expects the underlying price to rise sharply
b.Wants to guarantee dividend income
c.Seeks unlimited upside from appreciation
d.Wants to profit from or hedge against a decline in the underlying price
Explanation
A put option gives the holder the right to sell the underlying at the strike price and gains value as the underlying falls. Investors buy puts to speculate on declines or to hedge existing long positions. It is a bearish or protective strategy.
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