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Suppose you are trading derivatives on natural gas and you simultaneously execute the following transactions: Sell a forward contract at a price of $4.78 per
Suppose you are trading derivatives on natural gas and you simultaneously execute the following transactions: Sell a forward contract at a price of $4.78 per mmbtu, sell a put option with an exercise price of $4.80 per mmbtu, and buy two call options with an exercise price of $4.90 per mmbtu. The size of each contract is 10,000mmbty, the options are European style, and all of the contracts expire on December 31 Complete the following table to show how the payoff for your net position depends on the spot priceof natural gas on December 31 : (a) Draw a payoff diagram to show the payoff for your net position. Suppose you are trading derivatives on natural gas and you simultaneously execute the following transactions: Sell a forward contract at a price of $4.78 per mmbtu, sell a put option with an exercise price of $4.80 per mmbtu, and buy two call options with an exercise price of $4.90 per mmbtu. The size of each contract is 10,000mmbty, the options are European style, and all of the contracts expire on December 31 Complete the following table to show how the payoff for your net position depends on the spot priceof natural gas on December 31 : (a) Draw a payoff diagram to show the payoff for your net position
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