Why is a purchase of a futures contract or an option on a foreign asset not exposed
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The FTSE 100 is an index of the top one hundred British stocks. One FTSE futures contract has a multiplier of £10. The margin deposit is £1,500 per contract. FTSE options have a contract size of £10 times the index. What is the dollar amount of currency loss per index unit if the U.S. investor had bought.
a. The index in the form of stocks (e.g., £6,000 worth of an FTSE index fund)?
b. A December futures on FTSE?
c. A December 6,050 FTSE call?
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
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