Hi John,
In "Options" questions examiner always gives two strike prices. Do we need to calculate both, in order to get full mark? Is there any quick way to assess at the earlier stage that which strike price will give more favorable result and only do the calculation for that one? Otherwise it is too time consuming.
Thank you in advance!
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Do we need to calculate both strike prices in Option Questions?
8y ago#1I do discuss this in my free lectures on options.
As to whether to use all the exercise prices, it depends on the question. Usually, ideally you would show the calculations for all exercise prices available, and then discuss. However if you are short of time then just showing the workings in full for one of the exercise prices will get most of the marks - the marks are mainly for proving that you know how options 'work'.
(To show for all exercise prices does obviously take longer, although after you have done it for one then it does actually get a lot faster for the others because it is very much repeating the same things.)
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