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Respected Sir,
Can you plz explain how these amounts in currency option hedge have been calculated:
1116250
1128125
1140000
Also the the calculation of premium and premium at spot?
Page 229 kaplan kitThey are using 19 contract of 31,250 pounds each, which is a total of 593,750 pounds.
They have the right to convert this at the relevant exercise price.
If the exercise price is 1.8800 then it converts to 593,750 x 1.88 = $1,116,250.
At 1.9000 it converts to $1,128,125, and at 1.9200 it converts to $1,114,000.I explain how to calculate the premiums in my free lectures on foreign exchange risk management.
Thats so very kind of you Sir..
thankyou so much. This is my forst time using open tution and i am so happy with ur prompt response.. thanks alot
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