Curtis Call Put Options

Part-1

Mr. Curtis was enlightened by the information you provided but would like to learn if there are alternative methods available for dealing with currency risks. He requests that you research material from the Library and/or the Internet to construct a 2–3 page memo on the differences between buying a call option, selling a call option, buying a put option, and selling a put option. Also, give an example of a business scenario in which it would be appropriate to use each of the contracts (a put and a call contract). If, instead, you chose to use the forward market, assume you were going to receive 100,000 Japanese yen in 6 months and the current exchange rate was 5 yen equals 1 U.S. dollar. How many yen would you sell or buy in the forward market? Be sure to cite all references using the appropriate citation format.

Part 2 Deliverable Length: 4-6 paragraphs Tom Curtis is the treasurer of the midsized corporation, Ricardo International. The firm manufactures various plastic components used in the computer hardware industry. When the firm opened up, it initially did business in the Midwest region of the United States but now sells its components to customers in other countries. Mr. Curtis requests that you report and discuss some issues relating to futures contracts, which might be used in the future by the firm to hedge currency risk and interest rate risk. Some of the issues he needs to know more about include the following: • possible benefits to the firm in using the futures markets • functions and importance of the clearinghouse • concept of marked to market • regulatory responsibilities of the National Futures Association and the Commodity Futures Trading Commission