Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

It will be grateful that you can answer the full question, thank you. If you are interested to answer it, I will post this question

It will be grateful that you can answer the full question, thank you. If you are interested to answer it, I will post this question twice, and this part you can answer Part c & d.image text in transcribed

Suppose a private bank client has US$1,000,000 to investment. Advise the client on a derivatives strategy that take advantage of the current market opportunity. The components of your trading strategy could be more than one leg by using either futures or options or both. The underlying asset is your choice. a) What is the current market outlook and how does your trading strategy fit in? b) Describe your trading strategy in details. Hints - points to consider: What is the underlying asset? e.g. commodity, stock, stock index, bond, etc. What is the derivatives composition? How many contracts? How is the trade structured? How long is the maturity? What is the cost? How is the pricing done? What are the upside and downside potential? Any leverage? ... etc. The market prices can be obtained from e.g. Bloomberg, finance.yahoo.com, and exchanges such as cmegroup.com, hkse.com.hk. A screenshot of the pricing reference must be provided with your submission. c) Discuss the risk, reward and breakeven associated with your trade idea. d) Illustrate the payoff diagram and scenario analysis. Suppose a private bank client has US$1,000,000 to investment. Advise the client on a derivatives strategy that take advantage of the current market opportunity. The components of your trading strategy could be more than one leg by using either futures or options or both. The underlying asset is your choice. a) What is the current market outlook and how does your trading strategy fit in? b) Describe your trading strategy in details. Hints - points to consider: What is the underlying asset? e.g. commodity, stock, stock index, bond, etc. What is the derivatives composition? How many contracts? How is the trade structured? How long is the maturity? What is the cost? How is the pricing done? What are the upside and downside potential? Any leverage? ... etc. The market prices can be obtained from e.g. Bloomberg, finance.yahoo.com, and exchanges such as cmegroup.com, hkse.com.hk. A screenshot of the pricing reference must be provided with your submission. c) Discuss the risk, reward and breakeven associated with your trade idea. d) Illustrate the payoff diagram and scenario analysis

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Investment Management

Authors: Geoffrey Hirt, Stanley Block

10th edition

0078034620, 978-0078034626

More Books

Students also viewed these Finance questions

Question

3. What is the difference between proactive and reactive styles?

Answered: 1 week ago