Examine the historical prices of currency futures and the futures call and futures put options you selected

Question:

Examine the historical prices of currency futures and the futures call and futures put options you selected in Exercise 7.Select a time period that the contracts were active.

a. Use the Chart screen (Chart ) to create multigraphs for the futures, call futures, and put futures. On the Chart Menu screen, select the Standard G chart; once you have loaded your securities, go to "Edit" to put your graphs in separate panels.

b. Select a period and calculate the profit or loss from opening and closing a long straddle position at the futures call and put prices at the beginning and ending dates for your selected period.

c. Comment on any follow-up actions you could have taken during the period to change your position to a profitable one if you had a loss or more profitable if you had a profit.

d. Using the annotation bar, apply the "\% Change" tool to calculate the percentage change for your select periods, and then click the "News" icon on the annotation bar to find relevant news events on or preceding the opening date.

Exercise 7.

Select a currency futures option. Use CTM to identify the currency futures that have option contracts: Enter CTM; select "Currencies" and then select "Yes" on the "Options" tab to see currency futures with options contracts on them. Upload the currency futures contract with the selected options (e.g., BPA for British pound futures). Type EXS to find expirations (e.g., BPH7 to load March 2017 British pound futures). On the selected futures screen, type OSA to bring up the OSA screen, and select "Listed Options" on the contract from the red "Positions" dropdown tab to bring up listed futures options and then select the options to include in your evaluation. Using the Bloomberg OSA screen and "Scenario Chart" evaluate some of the following option strategies that would reflect an expectation of a future event (e.g., Brexit vote, an election, a Central Bank announcement) that could cause the dollar price of your selected currency to increase or decrease significantly:

a. Straddle Purchase: Long call and put with similar terms.

b. Simulated Straddle: Long two calls for each a short futures position.

c. Money Combination Purchase: Long call and put with different exercise prices.

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