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It will be a pleasure if someone can answer in detail :)

1 Answer

+1 vote

I suppose, for example, that if my business needed a certain commodity, say oil, I could buy a call option that gives me the right to buy the oil at a certain price, a price below which I fear the market price of oil might rise and give my business profitability problems.

Similarly, I could buy a put option that gives me the right to sell my product at a certain price, if I fear its market value is going to drop below that price.

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