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sir , how do we calculate which call or put option price to use in options , do we add the premium in the exercise price and then see which is more benficial?
There is no such thing as a ‘best’ exercise price to choose.
Different exercise prices can be used to set a smaller limit, but the premium will be higher (and will be wasted if the option is not exercised).
The marks in the exam are for proving you understand how options work and it doesn’t matter which strike price you use to illustrate (unless obviously the question specifies).
But sir if we add the premium price in the exercise price can we get the better exercise price ?
The premium doesn’t change the exercise price. The premium is payable whether or not it is exercised.
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