Dear Sir,
two questions I have regarding Collar % calculation in Fitzharris Co:
1) Why in answers they kept premium in annual %? Does it mean that if we need to calculate here the premium for 36 months we then use: contracts* 1000000* 0,211 * 36/12?
Would this be the case for absolute premium calculation?
2) Result of hedge on the sold call option - why we just take again annual %? If we would calculate an absolute result, we would devide by 400, right? In order to reflect 3-months length of futures?
Thank you.