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Hi Sir
For question Casasophia, I understood that we need to pay premium in option and thus we will use the lower rate of 1.3585 for conversion to Euro. Note that we are dealing with a call option.
If in case we had to deal with a put option and had to convert the premium, would we use 1.3618 for conversion?
Also, premiums are paid on options for both put and call or do we pay premium for call and receive premium for put!!
I’m confusing this with collar and thus the question on the conversion rate too.
Please assist on all questions.
Thanks
You pay a premium whenever you buy an option – whether it is a call option or a put option.
If you are creating a collar, then you will be buying an option (so paying a premium) and selling an option (so receiving a premium).
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