If you think that the dollar is going to appreciate against the euro, you should
A)buy put options on the euro.
B)sell call options on the euro.
C)buy call options on the euro.
D)none of the above

Question

Quizplus · Accepted Answer

If you think that the dollar is going to appreciate against the euro, you should buy call options on the euro. This is because buying a call option on the euro gives you the right to purchase euros at a fixed price (strike price) in the future. If the dollar does appreciate against the euro, the value of the call option will increase, allowing you to sell the option for a profit or exercise the option to buy euros at a lower price than the market rate. On the other hand, selling call options or buying put options on the euro would not be beneficial in this scenario.

If You Think That the Dollar Is Going to Appreciate