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A client believes that XYZZ stock has bottomed in price and is ready for a steep rebound. What recommendation would give the client the smallest profit if this occurs?
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A client believes that XYZZ stock has bottomed in price and is ready for a steep rebound. What recommendation would give the client the smallest profit if this occurs?

User Giel Berkers
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1 Answer

4 votes

Answer:

D) Buy XYZZ stock and sell an XYZZ call

Step-by-step explanation:

If the buyer is convinced that XYZZ stock has bottomed its price he should buy that stock since it's the cheapest it will get.

If he believes that XYZZ's price will soon rebound, then he should not sell a call option for XYZZ. f he sells a call option then his earnings will be very limited, since the price set at the call option will not be very high.

He should keep XYZZ stock for a while and wait for its price to rebound.

User Fabrizio Ferrari
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