An investor holds shares of a Canadian company and is concerned about a potential short-term decline in its stock price while wanting to retain ownership. Which option strategy would be most suitable?

Question: An investor holds shares of a Canadian company and is concerned about a potential short-term decline in its stock price while wanting to retain ownership. Which option strategy would be most suitable?

Answer options:

• Selling a covered call.
• Buying a call option. ✅ Buying a protective put.
• Selling an uncovered put.

Correct answer: Buying a protective put.

Explanation: A protective put involves buying a put option on a stock you already own. It acts like an insurance policy, limiting potential losses if the stock price falls below the put's strike price, while allowing the investor to profit from upward movements.