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You are a speculator expecting to reap profits from price changes. Due to the upward movement of interest rates in USA, you expect the USD
You are a speculator expecting to reap profits from price changes. Due to the upward movement of interest rates in USA, you expect the USD to appreciate substantially by 7% in the coming months. On examination of the derivatives market in Canada you find that the following USX options are available in the Montreal exchange. The current spot rate USD/CAD= $1.3025. One USX option is 10,000 USD. Your plan is to purchase 10 options. June USX Call option strike price $1.3250 premium CAD 0.01 June USX put option strike price $ 1.3155 premium CAD 0.005 Which option will you buy and what will be your gain/loss if the USD appreciates to 1.3485 on the settlement day
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