10) I noticed that the put volume of Dell increased just before the big price decline

Finance Aug 07, 2020

10) I noticed that the put volume of Dell increased just before the big price decline. This should have warned me of the negative sentiment in Dell. Do you agree with this observation or not?

Expert Solution

Answer:

Explanation:

Yes, i agree with the observation. Put options are bought when we expect the stock price to go down. One day before the big decline in Dell stock, put volumes were increasing. It means people are accumulated the put options in the expectation of price decline.

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