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What is a long straddle

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Reference no: EM132794575

Question 1: You purchase one MBI March 170 put contract for a put premium of $15. The maximum profit that you could gain from this strategy is _________.

Multiple Choice

a) $170

b) $1,500

c) $15,500

d) $17,000

Question 2: If you anticipate a dramatic decline in stock prices, which naked strategy will make you the most profit?

Multiple Choice

a) long call

b) long put

c) short call

d) short put

Question 3: Briefly explain:

(1) What is a "long straddle"?

(2) What is a "short straddle"?

(3) When would you buy a long straddle?

(4) When would you buy a short straddle?

Reference no: EM132794575

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