The website of the Chicago Mercantile Exchange provides information about currency futures and options. Its address is www.cme.com.
1. Use this website to review the prevailing prices of currency futures contracts. Do today’s futures prices (for contracts with the closest settlement date) generally reflect an increase or decrease from the day before? Is there any news today that might explain the change in the futures prices?
2. Does it appear that futures prices among currencies (for the closest settlement date) are changing in the same direction? Explain.
3. If you purchase a British pound futures contract with the closest settlement date, what is the futures price? Given that a contract is based on £62,500, what is the dollar amount you will need at the settlement date to ful fill the contract?
4. Go to www.phlx.com/products and obtain the money currency option quotations for the Canadian dollar (the symbol is XCD) and the euro (symbol is XEU) for a similar expiration date. Which currency option has a larger premium? Explain your results.