Kaplan -the Armstrong group collars

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April 6, 2019 at 3:11 pm #511356
lachu910
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For the Armstrong group the co is receiving 25m euro . .so the answer says buy call sell put

SELL PUT. CALL OPTION
Excercise 96.5 97
Futures. 95.74. 95.74
U will excercise this option

But loss calculated is (76*25*50) =95000

Why is this calculated as a loss. . isn’t it a gain ?
April 7, 2019 at 9:19 am #511374
John Moffat
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I do not have the Kaplan book – only the BPP Revision Kit.

However I do have all past exam questions, so if it is a past exam question please say which year – then I will be able to answer your problem.
April 11, 2019 at 7:00 am #511781
lachu910
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Thr question paper is from sept dec 2015
April 11, 2019 at 3:29 pm #511943
John Moffat
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It is the put option that is exercised, and the person who will exercise it is the person who bought the option from us (because we sold the option). They will exercise because they make a gain, but we (i.e. the seller) therefore make a loss.

It may help you to watch my free lectures on collars.
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