A short position in the futures 2. The lower bound is given by equation At each node, upper number is the stock price; next number is the European put price; final number is the American put price Problem Once we know how to value options on a stock paying a dividend yield, we know how to value options on stock indices, currencies, and futures. A cash amount equal to the excess of the strike price over the futures price 26 The Payoffs If the futures position is closed out immediately: In this case, a corporation would buy a put with the lower exchange rate and sell a call with the higher exchange rate Sign up to access the rest of the document.
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DERIVATIVES - Forwards, Futures & Options explained nicely!
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