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Hi sir,
part b of the question, regarding the premium payable for options over futures contract, can i clarify that the premiums for strike price 96.50 is equal to 0.581% * €1million * 37 contracts * 3/12mths instead of what is showing in the suggested answer?
Sames goes to the gain from exercising option, why dont we times 3/12mths as what is done in kaplan study text chpt 13 test your understanding 5-Tolhurst Co?
Your advice is much appreciated.
But what you have written comes to $53742.5, which is exactly the same as the premium shown in the examiners answer!!
It does not matter how you show your workings – do it the way that you have done (which is what I always do) or use ticks. They both come to exactly the same answer.The same applied to the gain from exercising – either use ticks or do it the same way as with the premium. It doesn’t matter which you do.
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