ch11 - Chapter 11 Options(from Chapter 10 Currency Risk...

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Chapter 11 Options (from Chapter 10) Currency Risk Management
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11 - 2 Outline Options Currency Risk Management Hedging though invoice currency Hedging via lead and lag Exposure netting Portfolio hedging strategies
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Options Options are contracts that give the owner the right but not the obligation to buy or sell an underlying asset at a specified price (strike price), at or before a specified date (expiration date). Buying call options give you the right but not the obligation to purchase a specific security at a specific price within a specific period of time You have the right to “call” stock away. Buying put options give you the right but not the obligation to sell a specific security at a specific price within a specific period of time. 11 - 3
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Profits and Losses 11 - 4 Be sure to know how to draw these diagrams!
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