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can someone explain to me why this is a call? And why I wouldn’t buy a put?

Option exercise Paulo is a currency speculator for Allianz (Germany). His latest speculative position is to profit from his e
Should he buy a put or a call on Euro? Ans./ He should buy a call option on Euros What is Paulos net profit (including the p
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Answer #1

Given A/B = X
Where A is price currency ($)
and B is the base currency (€)

When price currency depreciates(fall significantly) that means we will be getting more of the price currency per unit of the base currency.

A/B = More than X.

So,

$/€ =1.09663

When $ depreciates(fall significantly) that means we will be getting more of the $ per unit of €.

After $ fall significantly:

$/€ =more than 1.09663

The call option is betting that price (X or quotation) will rise.

That's why we go for a call option and not put option.

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