Chapter 02 · Section 2.1

Fall In Exchange Rates

Suppose that Victor expected a strong fall in the exchange rate.

What kind of option would he purchase?

a) Call options.
b) Put options
• c) Calls or puts
  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.

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