Chapter 02 · Section 2.1
Exchange Rate Rise
Suppose that Victor expected a strong rise in the US/DM exchange rate. What kind of option would he logically purchase?
c) DM calls or puts (quoted in US$).
No. If Victor buys a put option he takes advantage of a fall in the price of the underlying asset. If he expects prices to rise, he would profit from a call option.
a) DM call options (quoted in US$).
b) DM put options (quoted in US$).
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