1.Buying an at-the-money put has a greater return potential than buying an out-of-the-money put because it is more likely to be in-the-money. Appraise this statement.
2.Suppose that you wish to buy stock and protect yourself against a downside movement in its price. You consider both a covered call and a protective put. What factors will affect your decision?
3.You have inherited some stock from a wealthy relative. The stock had poor performance recently, and analysts believe it has little growth potential. You would like to write calls against the stock; however, the will stipulates that you must agree not to sell it unless you need the funds for a personal financial emergency. How can you write covered calls and minimize the likelihood of exercise?
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