00:01
So, here in the question there are two parts for successfully hedge.
00:08
Hedge and anticipated future purchase.
00:15
We can use the following strategy, which is first long call.
00:24
So, this strategy give a right to buy underlying asset to predetermined price strike then long call and short call.
00:35
Long call and short put.
00:39
This combination is known as a synthetic long future position.
00:42
It stimulates owing the underlying asset and can be used to hedge against the future purchase.
00:49
It will be long put and short call.
00:55
This combination is known again as a synthetic short future position.
00:59
So, while it is typically used to speculate on falling prices, it can also be employed as the part of hedging strategy of future purchase.
01:09
D will be long put...