Question Details

Compare and contrast forward and futures 



1. Forward versus Futures Contracts. Compare and contrast forward and futures contracts.
2. Currency Strangles. (See Appendix B in this chapter.) Assume the following options are
currently available for British pounds (₤):
• Call option premium on British pounds = $.04 per unit
• Put option premium on British pounds = $.03 per unit
• Call option strike price = $1.56
• Put option strike price = $1.53
• One option contract represents ₤31,250.
a. Construct a worksheet for a long strangle using these options.
b. Determine the break-even point(s) for a strangle.
c. If the spot price of the pound at option expiration is $1.55, what is the total profit or loss to the
strangle buyer?
d. If the spot price of the pound at option expiration is $1.50, what is the total profit or loss to the
strangle writer?



Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help