IDNLearn.com: Your one-stop destination for reliable answers to diverse questions. Our platform is designed to provide accurate and comprehensive answers to any questions you may have.
Sagot :
An investor can buy/sell a call option and a put option with the same strike price and expiration date in order to simulate a standard forward contract.
A synthetic forward contract creates an offsetting forward position by combining call and put options with the same strike price and expiration date.
A forward contract is a customizable derivative contract between two parties to purchase or sell an asset on a future date at a defined price. Forward contracts may be customized to include a particular commodity, quantity, and delivery date.
Assume the delivery cost is k and the delivery date is t. When both options have strike price k and exercise date t, a forward contract is formed by purchasing a European call and selling a European put. Under all conditions, this portfolio produces a payout of st -k, where st is the stock price at time t. Assume FO is the forward price. If k=FO, the new forward contract has no value. When the strike price is F0, the price of a call matches the price of a put.
To know more about forward contract click here:
https://brainly.com/question/27961507
#SPJ4
We value your participation in this forum. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. IDNLearn.com has the answers you need. Thank you for visiting, and we look forward to helping you again soon.
