How were the banks expecting to make a profit by buying puts

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Reference no: EM131342051

According to an article in the Wall Street Journal, in late 2009, "Between Dec. 9 and 11, some big European and U.S. banks made bearish calls on the euro by buying one-year euro ‘puts.'"

a. What is a "bearish call"?

b. What is a put?

c. How were the banks expecting to make a profit by buying puts?

According to the same article, that December "the bearish bet against the euro had risen to record levels of 60,000 futures contracts . . . the highest level since 1999, according to Morgan Stanley."

d. What is a "bearish bet"?

e. Were these investment bears buying or selling euro futures contracts?

Reference no: EM131342051

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