- This topic has 1 reply, 2 voices, and was last updated 1 year ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
We haven’t been provided the spot or future rate on the transaction date.
How will the outcome be calculated if the Option is NOT exercised?We can’t, and the question does not ask you to do that. The question asks which will give the highest receipt. This is no problem if the options are exercised, but if they are not exercised then all you can do (as the answer does) is ‘work backwards’ and determine what the exchange rate would have to be in order for options to give the same receipt as futures (and therefore which would give the higher receipt depends on whether the exchange rate turns out to be higher or lower than that rate).
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.