Equity Investments Q68

0. Mike buys a stock at $50 and wants to limit downside risk. Which of the following orders will most likely guarantee that he can sell the stock at $40? (GTC means good till cancelled)

Answer
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Option : A
Explanation : Option contracts are executed at the strike price and can therefore be viewed as limit orders. In this case, a put buy order at a strike price of $40 will guarantee selling the stock at $40.

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