Question
Suppose that April Gold futures are trading at $1,248.90 per oz and Siver April is trading at $18.445 per oz. At these prices the Gold
Suppose that April Gold futures are trading at $1,248.90 per oz and Siver April is trading at $18.445 per oz. At these prices the Gold Silver Ratio (GSR) is 67.71 and you expect this ratio (or spread) to decrease.
a. How would you trade this expectation in a way that you are protected from directional changes in metal prices.
b. If in a month, the spreads have decreased as expected, what trades would you do?
c. Under what circumstances would your trading strategy fail?
Suppose that April Gold futures are trading at $1,248.90 per oz and Siver April is trading at $18.445 per oz. At these prices the Gold Silver Ratio (GSR) is 67.71 and you expect this ratio (or spread) to decrease.
a. How would you trade this expectation in a way that you are protected from directional changes in metal prices.
b. If in a month, the spreads have decreased as expected, what trades would you do?
c. Under what circumstances would your trading strategy fail?
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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N. Hyman
9th Edition
0324537190, 9780324537192
