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Hi, for sample answer, I notice that under “option”, when calculating premium (3.2 x 25 euro x 50 contracts = 4,000 euro), the number of months (3-month euro futures) is not taken into account. Please may I know whether this is because of the tick value of 25 euro?
Same to Q.45 Daikon, the calculation of premium does not take into account the number of months, also because of the tick value in the case scenario?
Thank you.
Yes. As I explain in my lectures, the tick value is calculated based on them being 3 months futures. (And I do explain in the lectures how the tick value is calculated).
Having said that, as I also state in my lectures, I never bother using tick values whether or not they are given in the question.
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