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Sir can you please tell me how the investment period as 2 and length of contract as 3 been calculated .
Is the ivestement period 2 because event take place in 7 months and expenditure will be necessary in 5 months or any other reason.Or because the five months time finish in April and future we have taken is of June. And i dont know about length of contract.Many thanksAm i right that length of contract is always three.And in same question why have they chosen Buy put option.Am i correct that while borrowing its always put,but dont know why buying and not selling.Thanks
You must watch the free lectures on interest rate futures and options – I cannot type out the whole lecture here – because all of these points are dealt with in detail in the lectures.
Futures are always 3 month futures – all that means is the profit or loss is calculated as though it is for 3 months.
We always deal in the future ending soonest after the date the loan starts.
You always buy options (unless we are creating a collar) – the question is whether you buy a call option (which is the right to buy futures) or whether you buy a put option (which is the right to sell futures).
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