Question
To keep things simple, assume that all prices are continuous and that any size order may be filled if an action (trigger) price is hit.
To keep things simple, assume that all prices are continuous and that any size order may be filled if an action (trigger) price is hit.
1.
a) The current price per ounce for a gold futures contract is $400. You believe if the price moves up by $10 that this contract would be fundamentally overpriced. What order would you place with your broker now to try to trade on this belief?
b) The current price per ounce for a gold futures contract is $400. You believe if the price moves down by $10 that this contract will be fundamentally underpriced. What order would you place with your broker now to trade on this belief?
c) The current price for a gold futures contract is $400. You believe if the price moves up by $10 that it will be in an upward trend. What order would you place with your broker now to try to trade on this momentum movement belief?
d) The current price per ounce for a gold futures contract is $400. You believe if the price moves down by $10 that it will be in a downward trend. What order would you place with your broker now to try to trade on this momentum movement belief?
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Financial Valuation
Authors: James R. Hitchner
4th Edition
1119286603, 978-1119286608
