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Social Science Clinic => Business => Finance => Topic started by: frosh101 on Mar 29, 2022

Title: One of the biggest differences between a futures option and a futures contract is that
Post by: frosh101 on Mar 29, 2022

Question 1

Mr. Lecourt sells short one contract for September delivery of 125,000 euro for $134,375.  Mr. Lecourt covers his short when the exchange rate is $1.15 per euro.  Mr Lecourt
◦ loses $9,375.
◦ loses $18,750.
◦ loses $143,750.
◦ gains $143,750.

Question 2

One of the biggest differences between a futures option and a futures contract is that
◦ the option limits the loss exposure to the price of the option.
◦ the futures contract limits the loss exposure to the price of the contract.
◦ an option can be traded on the secondary market, whereas a futures contract cannot.
◦ a futures contract can be traded on the secondary market, whereas an option cannot.

Title: One of the biggest differences between a futures option and a futures contract is that
Post by: Preeti on Mar 29, 2022

Answer 1

loses $9,375.

Answer 2

the option limits the loss exposure to the price of the option.