A Currency Futures Option Amounts to a Derivative on a Derivative

question 90

Multiple Choice

A currency futures option amounts to a derivative on a derivative. Why would something like that exist?

• A)For some assets, the futures contract can have lower transactions costs and greater liquidity than the underlying asset.
• B)Tax consequences matter as well, and for some users an option contract on a future is more tax efficient.
• C)Transactions costs and liquidity.
• D)All of the above

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