16) Which five statements regarding currency options are true?

A The seller (writer) of an option has potentially unlimited gains.

B A Long EUR Call option incorporates the right to sell EUR.

C A Long EUR Call option incorporates the obligation to buy EUR.

D Options can have different strike prices and hence varying premiums.

E The buyer (holder) of an option has potentially unlimited gains and limited losses.

F When used for hedging, the potential gains from the option are used to compensate possible losses in the underlying base transaction. This is why an exporter will always hedge with a Long EUR Put option.

G Hedging can only be done with long options. However, hedgers may sell short options to reduce hedging costs.

H A EUR Long Call option is always also a USD Short Put option.

I Options have a bid and an ask quote for short and long positions.

NOTE: 5 are correct