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As a major maker/manufacturer of premium leather hand luggage, you are concerned that leather prices may move beyond their current level of $35/ pound when
As a major maker/manufacturer of premium leather hand luggage, you are concerned that leather prices may move beyond their current level of $35/ pound when you are ready for production. Therefore, you enter into the appropriate option contract. The strike price is fixed at the current spot price at an options price of $5.00 per option. What is the position you take and your profit or loss, if eight months later, leather is selling at the spot market for $28.50 ? long cali, $5.00 foresput 5500 short futures, $5.00 Write eall, $5.00 long call, $28.50
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