7. Option combinations (S21-2) Dr. Livingstone I. Presume holds £600,000 in East African gold stocks. Bullish as he is on gold mining, he requires absolute assurance that at least

£500,000 will be available in six months to fund an expedition. Describe two ways for Dr. Presume to achieve this goal. There is an active market for puts and calls on East African gold stocks, and the rate of interest is 6% per year.