Forex Options
Options based on trade, using the option to purchase currency at a given strike price. The given strike price is based on exchange rates.
Okay stuff, if you have an investor whose company trades or has substantial retail services oversees.
Missed questions 1, 4, 6, 7, 8, 11, 14. D:
ECUs contract size are 62.5k. I thought that was just DMs.
The question on if a currency is expected to increase what should the investor buy i said a call option on the USD, but the answer is a call option on the foreign currency. of course, that is b/c it was the franc which was expected to rise. if the dollar was expected to rise, i would have been right. but i wasn't.
i had absolutely no idea how to calculate the margin requirements since they are terribly complicated. it is not the same formula as a security index.
one ? was on if a DM fell and he had a call what would he lose. i neglected to mulitply my answer by the # of contracts.
i missed one ? calculating the premium of a french franc b/c i took the "tenth of cent" decimal the wrong way. i missed another question calculating DM b/c i multiplied the contracts by the $1.77 not $0.0177 (which is that darn tenth of a cent thing again). also once multiplied by the tenth of a cent, the premium amount needs to be mulitplied by the # of DM in the contract, not the number of contract (instead of 100k, 62,500).
# of yen in a Japenese yen contract is 6,250,000 not 62.5 M.
onto a new section!
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