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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Currency Option
In calculating how many contracts to buy/sell, do we divide by spot or exercise price. My friend’s BPP used exercise price while my Kaplan text used spot. Thank you.
You should use the exercise price. I have not seen the Kaplan text books, but if what you say is true then it seems that they are wrong.
Thank you. It’s the solution to TYU 4 (Pongo) chapter 13.
“The current $/£ spot rate is 1.5190 – 1.5230”.
Solution:
How many contracts? Cover $350,000/1.5190 = £230,415 using £25,000 contracts ………….. 9 contracts.
Again, they should have used the exercise price (but I do not have the Kaplan books). Unless the exercise price was also 1.5190 then it would seem that they are wrong.