If you expect the euro to depreciate, it would be appropriate to ____ for speculative purposes.
A) buy a euro call and buy a euro put
B) buy a euro call and sell a euro put
C) sell a euro call and sell a euro put
D) sell a euro call and buy a euro put

Question

​If you expect the euro to depreciate, it would be appropriate to ____ for speculative purposes.
A) ​buy a euro call and buy a euro put
B) ​buy a euro call and sell a euro put
C) ​sell a euro call and sell a euro put
D) ​sell a euro call and buy a euro put

Quizplus · Accepted Answer

If you expect the euro to depreciate, you would want to sell a euro call and buy a euro put for speculative purposes. Selling a euro call means you receive the premium upfront and have the obligation to sell the euro at a specific price, while buying a euro put means you have the right to sell the euro at a specific price, protecting against the depreciating value. This strategy benefits from a decrease in the euro's value, as the put option will increase in value, potentially offsetting any losses from the call option.

​If You Expect the Euro to Depreciate, It Would Be

If You Expect the Euro to Depreciate, It Would Be