Ch01HullOFOD7thEd.pptVIP

Options, Futures, and Other Derivatives, 7th Edition, Copyright ? John C. Hull 2008 * Speculation Example An investor with $2,000 to invest feels that a stock price will increase over the next 2 months. The current stock price is $20 and the price of a 2-month call option with a strike of 22.50 is $1 What are the alternative strategies? Options, Futures, and Other Derivatives, 7th Edition, Copyright ? John C. Hull 2008 * Arbitrage Example A stock price is quoted as ￡100 in London and $200 in New York The current exchange rate is 2.0300 What is the arbitrage opportunity? Options, Futures, and