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Dear John,
Can you please explian currency futures on Lirio Co march/june 2016. We are suppose to calculate profit or loss on currency future.Rite. Since its a call we buy at 0.8656 june future.On transcation date the exercise price is 0.8600. Since its a loss on transcation rite or i m wrong here.
Can you please explain the profit or loss on currency future specifically to this scnerio and why the answer dnt mention it.
You seem to be confusing the futures with the options!
The options give the right to convert at 0.86 which is what the answer has done. There is no calculation of gain or loss – we convert at 0.86 and calculate also the premium.
With regard to the futures, we don’t know the futures price on the date of the transaction, and so we cannot calculate a gain or loss on the futures.
Therefore we need to calculate and use the lock-in rate.So John just to clear my understanding.
When spot rate on transcation date is not given we cant calculate future price on transcation date and if we dnt have future price on transcation date.We calculate lock-in rate and lock-in rate is used to determine reciepts on transcation date and also number of contracts and this is related to currency futures. Rite John
( So If the above statement is rite. Just one last thing to ask you that This situation is only related to currency future or intrest rate future as well ? )
I suppose i think for interest rate future they will mention the actual interest rate …
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