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Question

Net purchases

669,500 USD

I need this mch USD to pay for the consignments


Conversion
Contract Size
Contracts

447,228 GBP
62,500
7.16

Contracts
Future sell
Future Buy

437,500

437,500
437,500

1.4970
1.565 -

Buy USD in spot


Buy USD for contract settl

Target
Actual Cost
Loss

654,938
684,688
29,750
423,734
18,829
442,563

Ready loss
Target
Actual
Gain

431,935
442,563
10,628 GBP

431,935
423,734
8,201

Future outcome

18,829

Net Loss

10,628

Question
Option Type
Underlying

Call option
Shares of Z Limited

Step 1
Best Exercise price
SP

Prem
91
93
95

Net

1.3
0.5
0.35

92.3
93.5
95.35

Transaction date
Spot

85

From option
Unhedge

91
85

15,000
200

1,365,000
17,000
1,382,000

From market

85

15,200

1,292,000

15,000

1,292,000
19,500
1,311,500

Go for the market


Premium

1.3

Case 2
Spot

97

From option
Unhedge

91
97

15,000
200

1,365,000
19,400
1,384,400

From market

97

15,200

1,474,400

Go for the options


Premium

1.3

15,000

1,384,400
19,500
1,403,900

If I wanted to sell those shares


Option Type
Underlying
SP

Put option
Shares of Company Z

Prem
91
93
95

0.8
1.35
2.3

Net
90.20
91.65
92.70

Spot

85

From option
Unhedge

95
85

15,000
200

1,425,000
17,000
1,442,000

From market

85

15,200

1,292,000

15,000 -

1,442,000
34,500
1,407,500

Go for the options


Premium

-2.3

Case 2
Spot

97

From option
Unhedge

95
97

15,000
200

1,425,000
19,400
1,444,400

From market

97

15,200

1,474,400

15,000 -

1,474,400
34,500

Go for the market


Premium

-2.3

1,439,900
Question
Call option
Underlying
SP

Buy USD
USD

Prem
Net
125
3.00
128.00
128
2.50
130.50
130
1.50
131.50

Transaction date
Spot

130

From option
Unhedged

125
130

100,000
450

12,500,000
58,500
12,558,500

From market

130

100,450

13,058,500

100,000

12,558,500
300,000
12,858,500

Go for the option


Cost of acquisition
Premium

Case 2
Spot

130

From option
Unhedged

125
129

101,000
150 -

12,625,000
19,350
12,605,650

From market

130

100,850

13,110,500

Go for the option

Cost of acquisition
Premium

101,000

12,605,650
303,000
12,908,650

Question
Option Type
Underlying

Put option
Euros

Best Exercise price


SP

Prem
130
135
140

Net
4
10
16

126.00
125.00
124.00

Size of payment
Contract Size
Contracts

270,000
62,500
4.32

Limited to

250,000

Transaction date
Spot

128

From option
Unhedged

130
128

250,000
20,000

32,500,000
2,560,000
35,060,000

From market

128

270,000

34,560,000

250,000 -

35,060,000
1,000,000
34,060,000

Go for the option


Premium

Question

Option Type
Underlying

Put option
SA Rands

EP

19.30 RA / GBP

Transaction date
Spot

21

From options
19
20,000,000
(to be received from the options contract)
From market

21

Go for option
Premium

20,000,000

1,036,269

952,380.95

1,036,269
24,000
1,012,269

Case 2
Spot

17.60

From options
19
20,000,000
(to be received from the options contract)

1,036,269

From market

1,136,364

Go for market
Premium

18

20,000,000

1,136,364
24,000
1,112,364

Question
Option type
Under lying

Put option
GBP

Best EP
SP

Prem
Net
1.50 0.0042
1.4958
1.55 0.0415
1.5085
1.60
0.094
1.506

Coverage to be made
Min Contract size
Contracts

3,750,000
31,250
120.00

Transaction date

1.48

From option

1.55

3,750,000

5,812,500

From market

1.48

3,750,000

5,550,000

Go for the option


Premium

5,812,500
155,625
5,656,875

case 2
Transaction date

1.57

From option

1.55

3,750,000

5,812,500

From market

1.57

3,750,000

5,887,500

Go for the market


Premium

5,887,500
155,625
5,731,875

case 3
Transaction date

1.62

From option

1.55

3,750,000

5,812,500

From market

1.62

3,750,000

6,075,000

Go for the market


Premium

6,075,000
155,625
5,919,375

Question
Option Type
Underlying
Theme

Call option
GBP
I will be purchasing GBPs and Will pay in USD
which I will receive from my client / customer

Step 1
Pick the best EP (Lowest possible cost)
SP

Pre
Net
1.4 0.0574
1.4574
1.425
0.034
1.459
1.45 0.0194
1.4694

Coverage to be made
Contract size
Contracts

7,142,857
31,250
228.57

So
Converage to be done

229
7,156,250

Transaction date
Spot

1.55

From options

1.4

7,156,250

10,018,750

From market

1.55

7,156,250

11,092,188

7,156,250

10,018,750

From option

From custmoers
To be purchased from market
Cost

1.55

18,750

10,000,000
18,750
12,097

(USD)
Effective proceeds in GBP
Premium

7,144,153
284,053
6,860,100

Question
Me
Dealer

Dear sir I need to sell some dollors


10,000,000
Sir we dont purchase USD we purchase and Sell GBPs

Me
Ok. If I sell GBPs which currency will you give me in exchange
Dealaer Dollors sir
Me

So if I need dollors to sell, I can buy GBPs in options. You will give
me GBP abd I will give you dollors which I will receive from my
foreign customers.

Contract Type
Underlying
Step 1
Pick the best EP
SP

ER
NET
1.4 0.0574
1.4574
1.425
0.034
1.459
1.45 0.0194
1.4694

Step 2
Select contract quantity

Call option
GBP (unfortunatly, but I need USD to sell)

Amount
Rate
GBP to be purchased
Contract Size
Contracts

10,000,000
1.4
7,142,857
31,250
228.57

Limited to (229 contracts)

7,156,250

Step 2
Pay premium in dollors and purchase dollors for this purpose
GBPs purchased
Premium
Amount in USD
Conversion rate
Cost in GBPs

7,156,250
0.0574
410,769
1.4461 Selling rate indir quote
284,053 Paid on day 1
in GBPs

From option

1.40

7,156,250

10,018,750

From market

1.55

7,156,250

11,092,188

From options
Payment through clinet receipt
Total payment
For acquisition of GBP
For buying extra shares
premuim paid
Total
Question
Option Type
Underlying
Step 1
Select the best EP

Call option
GBP

10,018,750
10,000,000
18,750

7,156,250
12,097
284,053
6,860,100

SP

ER
NET
1.4 0.0574
1.4574
1.425
0.034
1.459
1.45 0.0194
1.4694

Step 2
Select the number of contracts
Coverage to be made
Convert
Size of the contract
Contracts

10,000,000
7,142,857
31,250
228.57

1.40

So

229

7,156,250

Premium to be paid
Coevrage
Premium
Premium
GBP payment

7,156,250
0.0574
410,769
284,053

GBP
in USD
USD
At Selling rate on acq date

Step 3
Transaction date hisab kitab
Spot

1.35

From option

1.40

7,156,250

10,018,750

From market

1.35

7,156,250

9,660,937.50

Go for market
Premium paid

1.35

10,000,000

7,407,407
284,053
7,123,355

Question
From option

155

100,000

15,500,000

From market

170

100,000

17,000,000

Go for the option

15,500,000

Take the loan to exercise the option


Future income
Interest cost

14.50%

3
-1.87
1.13

Best stratey
Buy shares now using loan and sell it in futures
Total receovery

17,300,000

PV of the recover
Cost
premium

Future income
Interest cost

14.50%

0.1
-0.04
0.06

17,093,454
15,500,000
300,000
1,293,454

GBPs

GBPs

GBPs

GBPs

d Will pay in USD


client / customer

USD

n exchange

s. You will give


ve from my

d USD to sell)

indir quote

USD

te on acq date

Question
Option type
Underlying

Call option
GBP purchased

Step 1
Pick the best EP
SP

Prem
Net
1.40
0.0574
1.43
0.03
1.45
0.02

Step 2

1.4574
1.459
1.4694

Contracts and coverage possible

Coverage to be made
Contract Size
Contracts
So
Step 3

229
Premium paid

Premium is paid in USD and I need to purchase it


Premium
I need that much of dollors

0.0574

7,156,250

1.4461

410,769

Buy them now (ready)

Transaction date
Spot

1.55

From option

1.40

7,156,250

From market

1.55

7,156,250

I will exercise the option


I will have to pay
To get
Buy the excess dollors
GBP
Net receipts in GBP
I got from option
Premium paid
Excess purchases

Part 2
Option Type
Underlying
Step 1
EP

Step 2

Call option
GBP
Pick the best EP

Prem
Net
1.40
0.0574
1.43
0.03
1.45
0.02
Contract selecttion

Coverage to be made
Conversion

Contract size
Conracts requirement
So

1.4574
1.459
1.4694

Step 3
Premium paid
Premium
Conversion at start

0.06

7,156,250
1.4461

From option

1.40

7,156,250

From market

1.35

7,156,250

1.35

10,000,000

Transaction date

Go for market
Acquire
Premium paid

Question
Best strategy
Exercise the call option now
Share price
Exercise price
Gain

170
155
15

Take loan from bank (Rs 155 to exercise)


Take the security and sell it in future
Future Gap
Interest
Arbitrage gains
Total gains
I got in total
Payment
Interest
Total gains

3.00
-1.87
1.13

17,300,000
15,500,000
187,292
1,612,708

Exercise of option
Arbitrage on future
Total gains

1,500,000
112,708
1,612,708

Part 2
Dont exercise the option
Just take the arbitrage gains
Gains
Interest cost

0.10
-0.05
0.05

Question
Forward
Rates
Spot
1 month Fwd
2 month Fwd
3 month Fwd

60.50
60.75
61.00
61.26

Options

Jan
Feb
Mar

From option
From Mrkt
3,214,450
3,219,750
3,214,450
3,190,600
3,214,450
3,227,700

Jan
Feb
Mar

Outcome
Premium
3,214,450
21,200
3,190,600
31,800
3,214,450
48,760

Futures

Future Buy
Future Sell

Ready buy
Future Outcome

3,214,450 3,206,500
7,950 -

3,259,500
3,182,650
76,850

3,219,750
7,950
3,227,700

3,190,600
76,850
3,267,450

Question
Option type
Underlying
Step 1
SP

Put option
GBP sold
select the best EP

Prem
Net
1.475
0.00
1.5
0.01
1.525
0.01

Step 2

1.47481
1.4947
1.5125

Contracts

Coverage to ba made
Conversion
Contract size
Contracts

2,000,000
1,311,475
31,250
41.9672131148

So
Step 3
Premium

1,312,500
Premium payment
0.0125
1,312,500

Convert on spot

16,406.25
10,688

Step 4
From option

1,312,500

2,001,562.50

From market
Go for market
Premium paid
Surplu

1,312,500

1,916,250

1,312,500
10,688
1,069
1,322,119

7,142,857
31,250
228.57
7,156,250

410,768.75

284,053 GBP paid

10,018,750
11,092,188

10,018,750 USD
7,156,250 GBP
18,750
12,097 GBP

7,156,250
284,053
12,097
6,860,100

10,000,000
1.40
7,142,857
31,250
228.57
7,156,250

Outflow

410,768.75
284,053 GBP paid

10,018,750
9,660,938

7,407,407.41
284,053
7,123,355

(173-170)
(155 * .145/2)

(173 * 100,000)

4.25 * 0.145 / 12

Amount
3,219,805
3,233,165
3,246,581
9,699,551

Outcomes
3,214,450
3,190,600
3,214,450
9,619,500
Net
3,235,650
3,222,400
3,263,210
9,721,260

3,272,750
3,219,750
53,000
3,227,700
53,000
3,280,700
9,775,850

USD

GBP
GBP