You are long 12,500 call options written on MOOTS INC stock with a strike price of $88.00; with each contract costing $4.70. If the stock price at maturity is $95.

What is the profit on your position?

You are a smoothie manufacturer who anticipates purchasing 105,000lbs of orange juice on the ICE FUTURES US Market (NOTE: lbs or pounds are an imperial measurement of mass). The current spot price of orange juice is $0.94/lbs and the futures price is $0.97/lbs. Each contract is for the delivery of 15,000lbs of orange juice at maturity. 

In order to hedge exposure of upward price pressure on orange juice on the spot market you must go long how many contracts?

Answer rating: 100% (QA)

Question 1 If the stock price at maturity is 95 the call opt... View the full answer