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Hello, does anyone know why there is a loss on exercise? I thought you buy put at a lower price but sell at a higher price. Isn’t that a gain?
Thank youHi, I would like to know since this is receive €25m, so we have to buy call option.
To hedge collar, why isn’t we buy call @ 0.182 and sell put @ 0.347 ?
Please explain.
Hi! So apparently, it’s a “receipt” so we buy call for 0.032 and sell put for 0.123. Correct me if i’m wrong 🙂 Cheers
Hi! So apparently, it’s a “receipt” so we buy call for 0.032 and sell put for 0.123. Correct me if i’m wrong ? Cheers
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Hey,
With options collars, it is important to remember what a call and put option does.
What a call option does, in effect sets a minimum interest rate, while a put option creates a maximum interest rate.
So no matter what the actual situation is if you are receiving or paying an amount, for an interest rate collar the strike price for the call option is the minimum amount (97=3%) and the strike price for the put option is the maximum (96.5=3.5%).
Therefore, as stated before we buy a call option premium for 0.032 and sell put option premium for 0.123.
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