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Estimating the investment portfolio

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Reference no: EM133061346

You are a Financial Manager at FLR Capital Investments. You are responsible for part of their investment portfolio. Recently key news has broken in regards of two big mining companies.

Fortescue have announced that their LNG field off Port Hedland has gas deposits of 30% more than they initially anticipated.

McGowan Minerals also announced that their Iron Ore mine near Karratha has 25% less deposits than anticipated, and they will need newer sophisticated machinery to extract it effectively.

In regards of your role at FLR, look to answer the following questions:

a) What option would you consider using in regards of Fortescue and why? What are the characteristics of this option?

b) What option would you consider using in regards of McGowan Minerals and why? What are the characteristics of this option?

c) Which one of call or put options has the greater profit potential and detail why?

Reference no: EM133061346

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