Which would likely yield the largest speculative gain

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Problem 1: If you believe the present spot rate of gold, currently 1 oz of gold = 1800 USD will fall (eg will depreciate to 1600 USD), which of the following would likely yield you the largest speculative gain?

a. write (sell) a call option on gold

b. buy a call option on gold

c. write (sell) a put option on gold

d. buy a put option on gold

e. none of the above

Problem 2: If you believe the present spot rate of exchange of 1 Euro = 1.1200 USD will fall (eg will depreciate to 1 EUR = 1.1000 USD), which of the following would likely yield you the largest speculative gain?

a. write (sell) a call option on euro

b. buy a put option on euro

c. write (sell) a put option on euro

d. buy a call option on euro

e. none of the above

Reference no: EM132932062

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