Explanation:
A strangle is an options trading strategy that involves buying a call and a put option on the same underlying asset with the same expiration date, but different strike prices. Option C perfectly fits this definition. Option A describes a straddle (same strike price). Options B and D involve different expiration dates, which disqualifies them from being standard strangles.
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Q.77 An investor wants to implement a strangle using put and call options on the shares of UUKL. Which of the following pairs of options is he most likely to choose?
A
Buy a call option with a strike price of $30 expiring in 6 months and a buy a put option with a strike price of $30 expiring in 6 months
B
Buy a call option with a strike price of $30 expiring in 6 months and a buy a put option with a strike price of $30 expiring in 3 months
C
Buy a call option with a strike price of $30 expiring in 6 months and a buy a put option with a strike price of $25 expiring in 6 months
D
Buy a call option with a strike price of $30 expiring in 6 months and a buy a put option with a strike price of $25 expiring in 3 months
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