One of the exam reports states "Many attempted to treat the currency options as if they were exchange traded when they were not."
This was specifically because of calculation of no. of contracts said to be only applicable for traded options. So how do we calculate gain/loss in options if no contracts to be considered (OTC).
I'd like to practice on OTC options, which recent exams included question (calculations) on this?
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OTC options vs Traded options
9y ago#1OTC options are bought direct from the bank and can be arranged for any amount at any strike price.
Traded options have to be bought in fixed sized contracts and are only available for specified strike prices.
OTC options are very rarely asked in the exam - in fact I can only remember calculations on them being examined once.
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