How do options on futures differ from options on the asset, Ask an Expert

Finance

How do options on futures differ from options on the asset underlying the futures? The open interest in a futures contract changes from day to day. Suppose that investors holding long positions are divided into two groups: A is an individual investor and OL represents other investors. Investors holding short positions are denoted as S. Currently A holds 1,000 contracts and OL holds 4,200; thus, S is short 5,200 contracts. Determine the holdings of A, OL, and S after each of the following transactions.

a. A sells 500 contracts, OL buys 500 contracts.

b. A buys 700 contracts, OL sells 700 contracts.

c. A buys 200 contracts, S sells 200 contracts.

d. A sells 800 contracts, S buys 800 contracts. What determines whether volume increases or decreases open interest?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92045705

Have any Question?Write your Review or question?

Related Questions in Basic Finance

You are planning to make annual deposits of 4440 into a

You are planning to make annual deposits of $4,440 into a retirement account that pays 9 percent interest compounded monthly. How large will your account balance be in 32 years? (Do not round intermediate calculations a ...

Follow up - calculating a bonds yield to maturity amazon

Follow Up - Calculating a Bonds Yield to Maturity Amazon has a bond with a 10% annual coupon rate, 15 years to maturity and a par value of $1000. The current price is $928.09. Calculate the Yield to Maturity.

Charles is considering investing in treasury bills he

Charles is considering investing in Treasury bills. He requires a 2.7 percent annualized return on a six-month Treasury bill that has a par value of $10,000. The price Charles would be willing to pay for this T-bill is h ...

Calculating returnssuppose you bought a bond with a 58

Calculating Returns: Suppose you bought a bond with a 5.8 percent coupon rate one year ago for $1,030. The bond sells for $1,059 today. a. Assuming a $1,000 face value, what was your total dollar return on this investmen ...

For each of the following ytm figures calculate the price

For each of the following YTM figures, calculate the price and current yield for a ten-year, 5.00-percent, semi-annual pay bond with a face value of $1,000. YTM= 4% Price and current yield

To hedge a short share position one can short the put

To hedge a short share position, one can short the put option on the share. • What is the investor's intention in selling the put option? • What does the strike indicate when the trader has zero risk tolerance? • Under w ...

You have a portfolio of 5 stocks that have a total value of

You have a portfolio of 5 stocks that have a total value of $40,000. The beta coefficient of this portfolio is 1.2. You want to invest an additional $10,000 in a stock that has beta equal to 2.2. After adding this, what ...

You purchases a house for 18133300 you made a down payment

You purchases a house for $181,333.00 . You made a down payment of 20,000 and the remainder of the purchase price was financed with a mortgage loan. The mortgage loan is a 30 year mortgage with an annual interest rate of ...

Rich has an annual salary of 75000 which is expected to

Rich has an annual salary of $75,000 which is expected to increase by 3.5% per year. What would be his annual salary in real terms at the end of 7th year if inflation is expected to be 1.75%?

Question - discuss the aspects of the financial managers

Question - Discuss the aspects of the financial manager's role in the firm's cash and liquidity management, and the components of the firm's policies regarding liquidity. Include a discussion regarding the firm's policie ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert