Chapter 05 · Section 5.1

A hedger can protect a long spot position...

A hedger can protect a long spot position by establishing a fixed hedge with:

a) A long call options position.
• b) A long put options position.
  Yes. By buying a put option, a hedger in a long position is, through the exercise price, guaranteed a price for his asset. His loss potential is therefore limited to a comparatively small amount depending on the exercise price he chooses. Continue

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