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Hi John sir, I have 2 doubts:
1. What is a straddle option?
2. Can you give some rule which I can remember in order to identify when to buy a call or put option for both currency and interest rate hedges?
1. A straddle is an options strategy in which the investor holds a position in both a call and put with the same strike price and expiration date, paying both premiums. This strategy allows the investor to make a profit regardless of whether the price of the security goes up or down, assuming the stock price changes somewhat significantly.
However, they will of course have to pay the premiums and so they will only make a profit if there is a significant change in the price.2. I go through the rules in my free lectures on the management of foreign exchange and interest rate risk.
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