SIE Exam Question 472: Answer and Explanation

Question: 472

Your customer is long 100 shares of MSFT. The investor wants to protect the position without spending any additional money, what should he do?

• A. Buy a put.
• B. Buy a call.
• C. Sell a call.
• D. Sell a put.

Correct Answer: C

Explanation:

C: The investor is long the stock and wants to protect his position. The key to the question is that he does not want to spend any additional money. In this case he must sell a call. He will receive partial protection in the amount of the premium received.