Chapter 02 · Section 2.1

Position Expectations

Victor is long 3 PHLX DM Options. Victor, as an investor, expects:

• a) the exchange rate (US$ cents per DM) to fall.
  No. This is true if you know that Victor bought a put option. What if he bought a call?
  b) the exchange rate (US$ cents per DM) to rise.
  c) the exchange rate (US$ cents per DM) to remain stable.
  d) We cannot tell from this information what price movement he expects.

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