(a) Offer some reasons why Jonathan want to invest $100,000 or more in options and futures contracts....
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(b) List some of the risks of options trading for Jonathan and Cody.
(c) From an investor’s point of view, contrast trading in futures contracts with buying highly leveraged real estate.
Jonathan Williams and Cody Richardson, longtime partners in Lawton, Oklahoma, have bought and sold real estate properties for ten years. They have profited on many transactions, although they did have some substantial losses during the Great Recession. Their portfolio of real estate is worth about $4.7 million, on which they owe $2.9 million. Jonathan has read about investing in options and futures contracts, and last week, he talked with a stockbroker about the possibilities.
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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