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March 30, 2017 at 6:12 am
Gain/profit on option, should we take 3/12 or not?
and Premium should we take 3/12 or not?
as I found some take 3/12 and some not!
Could please explain?
John Moffat says
March 30, 2017 at 8:20 am
For interest rate futures and interest rate options on futures, we always take 3/12 (unless you are using ticks, in which case the tick value already takes account of the 3/12 – but there is never any need to use ticks).
If you are referring to specific past questions then ask in the Ask the Tutor Forum and I will explain the particular question.
March 31, 2017 at 11:33 am
Thanks Mr. Professor!
March 31, 2017 at 3:06 pm
You are welcome 🙂
July 19, 2016 at 10:13 am
While I know that this is not the place I must still comment and personally thank you Mr. Moffat. I just became an affiliate, with 0 fails and I think that you, sir, are a wonderful lecturer and I have gained a lot from your lectures. Please know that your work is duly appreciated. All the best.
July 15, 2016 at 5:54 pm
I have tried this lecture , I am not winning . But thanks anyway sir, I will keep on trying.
July 15, 2016 at 7:29 pm
try another browser, like google chrome
February 13, 2016 at 3:34 pm
Thats is you have to the option to either by at 96 or sell at 96?
February 13, 2016 at 6:06 pm
You can either buy now at 96 (and then sell later, and if the price has gone up you make a profit), or you can sell now at 96 (and then buy later, and if the price has gone down you end up making a profit).
February 13, 2016 at 3:31 pm
When they say ” BUY” the right to buy/sell futures at a fix rate for example 96, is it that given the type of transaction you can buy at 96 or sell at 96? or its only one of both?
September 24, 2015 at 1:13 pm
@ Sir John, Thank you for great lecture.
I want to ask about Futures price. e.g if you say futures price is 92,
1)is this amount in $ or cents? & that 92 is per contract? (e.g i want to buy two future contracts of $1m at exercise price of 92 each)
2)what will be the difference if i am borrowing in currency other than dollars say yen, does futures price will be derived from the same formula (100 – x%)?
3) Why we always sell futures when we are borrowing and buy futures when depositing? i like to understand the logic behind this?
Thank you once again!
September 24, 2015 at 1:24 pm
A future price of 92 is not in any currency – it is just another way of quoting 8% interest (100 – 8), and if you borrow money and are quoted a rate of interest then the % itself is not in any currency.
The whole purpose of using futures (as with foreign currency futures as well) is for the gain or loss on the futures deal to ‘cancel’ out the loss of gain on the transaction itself.
If you are borrowing money and the interest goes up, then you are losing out on the loan itself. However if the interest rate goes up, the futures price will fall. So you will make a compensating gain on the futures by selling now, and then buying back later when the price is lower. Vice versa if you are depositing money.
September 26, 2015 at 8:59 am
Thank you Sir,
can we also open our position by buying futures instead of selling futures when borrowing or it has to be selling futures first and buying later to close the position?
September 26, 2015 at 9:33 am
You can do, but it would be stupid thing to do! Because if interest rate go up you would be paying more interest on the borrowing, and at the same time you would make a loss on the futures.
The whole point in trading in futures is for the gain or loss on them to ‘cancel’ the gain or loss on the borrowing itself.
(I am not sure why you have posted a comment about futures under a lecture on options)
September 28, 2015 at 10:11 am
Okay now i got it, thanks very much.
Oh that is a mistake on my part. My apologies 😉
November 20, 2014 at 9:35 am
Are caps long term in nature?
November 20, 2014 at 3:43 pm
No – they are more likely to be short term.
November 27, 2013 at 1:23 am
John you are an amazing gifted tutor you make it all sound very easy, hope in will be both in practice and exam God Bless You am confident for a victory many thanks.
November 20, 2013 at 11:06 pm
Please can someone help me?
From the Link below
Global Pilot paper – from June 2013 exams
Question 2 – Alecto Co.
In the solution, when calculating the profit/loss of the futures deals for both interest rate futures and options on interest rate futures, the calculation was not divided by 400 as explained by the tutor here, can you please explain why this was the case?
November 21, 2013 at 5:04 am
The answer has used ticks, where the 400 has already been taken into account. You do not need to use ticks, but it gives the same answer either way.
One tick is a change of 0.01, so the profit or loss on one contract changing by 0.01 is 1M x 0.01 / 400 = $25
November 21, 2013 at 8:43 am
October 17, 2013 at 10:50 am
Thanks a lot :).
September 25, 2013 at 12:26 pm
Very clear and concise. Thank you so much 🙂
August 20, 2013 at 8:09 am
Very nice. God bless
November 13, 2012 at 9:48 am
Not Working. loads first couple of seconds the starts again… Please assist… Critical time… Critical topic!!!
November 13, 2012 at 1:17 pm
restart your router.. seems like a overloaded internet connection at your end
November 1, 2012 at 2:42 pm
i am not able to watch this particular video. Pls chk.
November 1, 2012 at 3:39 pm
@krishnamr007, lecture works fine
Please visit the support page: http://opentuition.com/support/ for help
November 1, 2012 at 2:39 pm
This video is not working.
June 8, 2011 at 2:33 am
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