An investor owns a stock and is bullish over the short term. Which of the following strategies will be the most appropriate one for this investor if the primary concern is to make a bet on the volatility of the stock?
A. A covered call
B. A protective put
C. An at-the-money strip
D. An at-the-money strap
Answer:D
A strap is betting on volatility in a bullish market since it pays off more on the upside.