Chapter 01 · Section 1.1
Watchmaker Case Study - Question 5
What happens if he does not receive the order and the price rises?
c) He will buy gold at $400/oz and sell it at the higher market price.
Yes. Of course he could also resell the option. This will be described on the next screen.Continue
d) He will be obliged to buy gold at $400/oz.
a) He no longer needs to buy the 1,000 additional ounces and will therefore not take advantage of the right conveyed by the option.
b) He will act exactly the same way as if he had received the order.
(Click here for help)