Question
You are a consuktant working for a farmer who wants you to offer risk management alternatives. you suggest a collar strategy. Why might the farmer
- You are a consuktant working for a farmer who wants you to offer risk management alternatives. you suggest a collar strategy. Why might the farmer reject your proposal?
a. The collar strategy is expensive, since it requires buying options.
b. The collar strategy does not protect the farmer if prices fall.
c. The collar strategy reduces the potential upside for the farmer if prices rise sufficiently
d. the collar strategy leaves the farmer no opportunity to benefit from price appreciation
2. Delta of a contract is 1,000 and gamma is 0. which type of position can this be?
a. LOng option, short stock
b. Long option, short futures contract
c. Short option, long stock
d. Long futures contract
PLEASE answer all the 2 questions thanks
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