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

and a futures contract. (2 Marks)

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

(i) "at the money" (2 Marks)

(ii) "in the money" (2 Marks)

(iii) "out of the money" (2 Marks)

For both a call and put option.

(c) Explain with the aide of a diagram a protective put buying strategy. (2 Marks)