Explanation:
A strangle is an options strategy where the investor holds a position in both a call and a put option with different strike prices but the same expiration date and underlying asset. In this case, the manager purchased a call at a strike price of USD 92 and a put at a strike price of USD 84. A straddle would involve the same strike prices for both the call and the put options.
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Q.99 A fund manager has realized that there is a great potential for profits in the options market without tying up much capital. To test the potential of options trading, he implemented a spread strategy by purchasing a 6-month European call with the strike price of USD 92 and a 6-month European put option with a strike price of USD 84 on the stock of XTR. Which of the following strategies is the fund manager most likely using?
A
Straddle strategy
B
Strip strategy
C
Strap strategy
D
Strangle strategy