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QUESTION: An investor wants to buy 100 oz gold at 400 per ounce in 6 months time by buying an option contract. Assume that the price of gold increases to $440 per ounce in 6 months. Using the option contract, show the final cost of the gold to the investor. Using the information above now assume that the price of gold falls to $360 per ounce in 6 months.

a. Using the option contract, show the final cost of the gold to the investor.

b. Compare the use of a futures contract with the use of an options contract.

option price is 360$