Jaleel is holding some Tesla shares (NASDAQ: TSLA) and The TSLA stocks are currently trading...
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Jaleel is holding some Tesla shares (NASDAQ: TSLA) and The TSLA stocks are currently trading at $985 on the Nasdaq. Given TSLA stocks are very volatile, Jaleel wishes to protect the value of his investments. He seeks your advice on using option contracts and presents a list of options for you to choose from. Assume the number of underlying shares per contract is 100 shares.
strike
call premium
moneyness
put premium
moneyness
$975
$10.01
$0.01
$980
$4.45
$0.04
$985
$0.63
$0.99
$1005
$0.05
$20.48
Identify what kind of risk that Jaleel is facing and to hedge this risk, which option would you suggest that Jaleel should purchase? Why?
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