You are long the S&P 500 index (500 US stocks). You are afraid that a tariff...

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Finance

You are long the S&P 500 index (500 US stocks). You areafraid that a tariff war will hurt the value of the US stocks.Should you buy a put or call on the S&P 500 to hedge yourexposure?
Multiple Choice
A. Sell a put
B. Buy a put
C. Buy a call
D. Do nothing
E. Buy a put and buy a call (the more options the better)

Answer & Explanation Solved by verified expert

3.8 Ratings (740 Votes)

Risk of tariff war creates chances of hurting the stocks prices and prices may fall which may lead to losses for us as we are long buy on a stock Let us analyse each option A Sell a put Selling a put which make us buy option when buyer of the option exercises it So if prices fall then buyer of See Answer

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You are long the S&P 500 index (500 US stocks). You areafraid that a tariff war will hurt the value of the US stocks.Should you buy a put or call on the S&P 500 to hedge yourexposure?Multiple ChoiceA. Sell a putB. Buy a putC. Buy a callD. Do nothingE. Buy a put and buy a call (the more options the better)