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Sir, for currency option question.. as there is more than 1 exercise price available, do we really need to calculate the total expected receipt/payment for each of the exercise price available to arrive for the comparison part with other hedge method?
1. Can’t we just calculate for one of the exercise price only? Like for put option, we choose the highest net receipt (exercise price-premium) and for call option we choose the lowest payment (exercise price + premium).
2. If can, do it affect the mark allocation?
Kindly help me pls. 🙂
Ideally you should do the calculation for all of the exercise prices (and these days there are usually only two given in the question).
When you have done the calculation for one of the exercise prices, then it is much quicker when you come to do the others.
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