a. Suppose you enter into a long 6-month forward position at a forward price of $50. What

Question:

a. Suppose you enter into a long 6-month forward position at a forward price of $50. What is the payoff in 6 months for prices of $40, $45, $50, $55, and $60?
b. Suppose you buy a 6-month call option with a of $50. What is the payoff in 6 months at the same prices for the underlying asset?
c. Comparing the payoffs of parts (a) and (b), which contract should be more expensive (i.e., the long call or long forward)? Why? Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.