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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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