Discuss the advantages of the two strategies

Reference no: EM131997163

Question: On May 8, 2013, an investor owns 100 Google shares. The share price is about $871 and a December put option with a strike price $820 costs $37.50. The investor is comparing two alternatives to limit downside risk. The first involves buying one December put option contract with a strike price of $820. The second involves instructing a broker to sell the 100 shares as soon as Google's price reaches $820. Discuss the advantages and disadvantages of the two strategies.

Reference no: EM131997163

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