I note the decision to excise or note is dependant on the future spot rate while completely ignoring the premium. My question is what if the rate moves either for us or not but the difference arising due to the rate variance is less than the premium amount?
Meaning the premium is big enough to move the final figure from a +ve change to -ve.
But remember that the premium is payable whether or not the option is exercised, so the amount of the premium is not relevant when it comes to deciding whether or not to exercise.
ziyapapa says
I note the decision to excise or note is dependant on the future spot rate while completely ignoring the premium. My question is what if the rate moves either for us or not but the difference arising due to the rate variance is less than the premium amount?
Meaning the premium is big enough to move the final figure from a +ve change to -ve.
John Moffat says
But remember that the premium is payable whether or not the option is exercised, so the amount of the premium is not relevant when it comes to deciding whether or not to exercise.
sunday says
Thanks alot
John Moffat says
You are welcome 馃檪
Lee says
Thanks for the lecture!
John Moffat says
You are welcome 馃檪
yanling0660 says
Thanks for your helpful lectures
John Moffat says
You are welcome – I am pleased that they are helpful 馃檪
Ruslan says
How I can get exam kit?
zee90 says
Thank you sir because of you i pass F9 and P4
cormac says
Thank you for all the helpful and interesting lectures.
judyluo says
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