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1. is all questions buy call option or put option ? is there a question where we sell call option or put option ? because I was not able to see this questions of selling call or put option
In the exam, for foreign currency transactions we always buy an option (and pay a premium).
When dealing with interest rate risk, we buy an option in order to fix a cap (if borrowing money), but we can also create a collar by also selling an option as well. I explain this in my lectures on the management of interest rate risk.
not for collar question. Just only for option questions (options on interest rate futures), we only buy call and put option right ?
Sorry let me rephrase the sentence.
not for collar question. Just only for option questions (options on interest rate futures and currency), we only buy call and put option right ?
You will never buy a call and a put option.
Currency options and interest rate options work in completely different ways.
Call options for currencies are the right to buy the currency at a fixed rate.
Call options for interest rates are the right to buy interest rate futures at a fixed price (and so if exercised you would then buy the future at the fixed price and immediately sell the future at whatever the price is on that date).You really do need to watch my free lectures on all of this.
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