Several months from now, you will make a large purchase
of lithium. As such, you are exposed to movements in the price of lithium between now and then. You will hedge this exposure using an option
contract.

Which option position will best hedge you
against unfavourable movements in lithium price?

Question

Several months from now, you will make a large purchase
of lithium. As such, you are exposed to movements in the price of lithium between now and then. You will hedge this exposure using an option
contract.

Which option position will best hedge you
against unfavourable movements in lithium price?

Answer

A long put option written on lithium

Answer

A short put option written on lithium

Answer

A long call option written on lithium

Answer

A short call option written on lithium

Crowdly

Several months from now, you will make a large purchase of lithium. As such, you...

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