Kyle's Investment Strategy

What should Kyle do if he believes the price of Ajax stock is about to decrease?

Option C) buy a put

When Kyle believes that the price of Ajax stock is about to decrease, he should consider buying a put option. Buying a put option gives Kyle the right to sell the stock at a predetermined price within a specific time frame, regardless of how low the stock's price may go. This means that if the price of Ajax stock does indeed decrease as Kyle anticipates, he can sell the stock at a higher price that was predetermined when he bought the put option.

Put options are valuable tools for investors who want to profit from a potential decline in a stock's price. By purchasing a put option, Kyle can protect himself from potential losses while also potentially profiting from the decrease in Ajax stock's price. It's important for Kyle to carefully evaluate the market conditions and the potential risks involved before buying a put option to ensure that it aligns with his overall investment strategy.