If You Expect Default Correlations to Increase in the Future

Multiple Choice

If you expect default correlations to increase in the future, what trade might you engage in to profit from this view?

A) Buy the senior tranche of a CDO.
B) Buy a second-to-default basket option and sell a first-to-default basket.
C) Sell a second-to-default basket option and buy a first-to-default basket.
D) Short the equity tranche of a CDO.