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You think that the dollar will appreciate against the euro from $1.21/ to $1.05/ during the next year, but you dont want to lose a
You think that the dollar will appreciate against the euro from $1.21/ to $1.05/ during the next year, but you dont want to lose a lot of money if you are wrong and the dollar depreciates.
a. Draw payoff profiles for buying and selling a futures contract, a put, and a call (6 diagrams). Explain briefly what each one requires or allows you to do.
b. Which of these 6 should you definitely not do if you believe the dollar will appreciate?
c. What are the advantages and disadvantages of the others?
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