Hello sir, In Chapter 19, Example 3 When we calculate the premium i.e $8250 It needs to be changed in pounds therefore we sell $ to buy a pound And according to the rule when the first currency is sold we will use the higher rate. So why are you using the lower rate?
Answer to example 3 (a) • Put options • April • Strike of 1.475 • Contracts: 1,000,000 ÷ 1.475 ÷ 31,250 = 22 • 22 × 31,250 × 0.0120 = $8,250 8,250 ÷ 1.4850 = £5,556 (payable now)