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a) ) Using a numeric example, illustrate and explain the pay-offs of a futures option and a futures contract. (b) Explain and illustrate graphically the

a) ) Using a numeric example, illustrate and explain the pay-offs of a futures option

and a futures contract.

(b) Explain and illustrate graphically the options concept of being:

(i) at the money

(ii) in the money

(iii) out of the money

For both a call and put option.

(c) Explain with the aide of a diagram a protective put buying strategy.

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