Question

a stockbroker uses a computer program to manage trades for clients
designing a trade with tradersys

1. choose strategy
2. choose expiration date
3. enter dollar amount
4. select run

a client wants to buy 30 shares of a certain stock expecting an increase in value and then sell those shares once the market price reaches a set value per share. which strategies would be best for the given scenario, and in which order?
a long position followed by covered call
b long position followed by stop - loss order
c stop - loss order followed by limit order
d stop - loss order followed by short position

Explanation:

• A long - position means buying shares with the expectation of a price increase, which aligns with the client's initial action of buying shares expecting an increase in value.
• A stop - loss order sets a specific price to sell shares. Once the market price reaches the set value (the client wants to sell when the price reaches a set value), the stop - loss order can be used to sell the shares.

Answer:

B. Long position followed by stop - loss order