# Reading 15 - Exhibit 8

I’m looking over exhibit 8 on page 237.  I understand that gamma is largest ATM.  Exhibit 8 (book 3), the largest gamma value is at share price 15 which is not ATM.  ATM is 16.  Is this a mistake?

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It looks like a mistake to me.

Is it listed in the errata?

If not, e-mail CFA Institute (info@cfainstitute.org) and mention it to them.

Simplify the complicated side; don't complify the simplicated side.

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Thanks S2000.

Can you give us a snippet of the actual exhibit and or problem? There could be a lot of missing context here.

¯\_(ツ)_/¯ It be like that sometimes.

Gamma is always highest at St=X. Period. But obvious at St=15, it will still have very high gamma but not the peak one. No need for further explanation

back against the wall. no retreat no surrender.

HerbsDelite wrote:
Gamma is always highest at St=X. Period.

Interestingly, I was just creating a graph of gamma from the BSM model and it appears that this isn’t true, period or not.

I have a call option with a strike price of USD 25 and one year to expiry; gamma is highest at USD 21.40, not USD 25.

Note that this is consistent with the graph in the exhibit: the maximum gamma occurs when the option is somewhat out of the money.

Simplify the complicated side; don't complify the simplicated side.

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http://financialexamhelp123.com/

So the graph is correct but the written logic in the text is incorrect?

Another_attempt wrote:
So the graph is correct but the written logic in the text is incorrect?

According to what I worked out in Excel, it appears so.

We’ll see what the authors of that reading have to say.

Simplify the complicated side; don't complify the simplicated side.

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http://financialexamhelp123.com/