John is holding a HSBC stock now priced at $50 per share. The following securities are also traded in the market now: HSBC Futures: futures price $55 per share, expiry 1-month later. HSBC Call option: exercise price $50 per share, expiry 1-month later, option premium $3. HSBC Put option: exercise price $50 per share, expiry 1-month later, option premium $5. a) John wants to hedge against the downside risk of holding HSBC stock. Identify the option strategy John should use and describe with a diagram the profits of John's hedged portfolio on the expiry date of the option. (10 marks) b) John wonders if it would be better to use futures contract instead of option for hedging purpose. Advise John what futures position he should engage, and the advantages and the disadvantages of using futures instead of option for hedging purpose. (10 marks)