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John Moffat.
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surajsusheel
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Hi John,
part (c) is there a way to find out balance on margin account without using ticks to calculate the loss on first day?
Also, are we assuming that if the options are not exercised it will give us the same receipt as futures?
John Moffat
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The loss is the number of contracts (98) x the change in the futures price (0.0011) x the contract size ($125,000) = 13,475.
If the options are not exercised then the conversion will be at whatever the spot rate is on the date of the transaction. This will not be equal to the futures price which is why the answer calculates what the spot rate would have to be for using options to be better than using futures.
surajsusheel
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