Final answer:
To protect gains on a short position, a stop order placed above the market price is used. The correct answer is A) Above, stop. A stop order becomes a market order to buy and closes the short position to lock in profits.
Step-by-step explanation:
To protect gain on a short position, place an order above the market. A stop order protects a short gain. The correct answer is A) Above, stop. When you have sold an asset short, you benefit from a decrease in the asset's price. To lock in the gains from this short position when the market moves in your favor, you would place a stop order above the current market price. This order becomes a market order to buy once the stock reaches the stop price. If the stock raises to that price or higher, the order is activated, and it will be executed at the next available price, protecting your gains from the short position by closing it out before the stock price can increase further.