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Call and Put Options' Use by Speculators

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1. How are put options used by speculators? can you describe the conditions in which their strategy would backfire. What is the maximum loss that could occur for a purchaser of a put option?

2. Now answer the above for call options instead of put options.

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Solution Summary

The solution talks about strategies for call and put options that are used by speculators. 196 words with one reference.

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1. Put options are purchased by speculators when the price of the underlying stock is expected to remain stable or decrease in the near future. The strategy of purchasing a put option would backfire if the stock price increases.

Put options are sold by speculators when the price ...

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