Why are they taking the spot price to value an option?
Shouldnt they be taking the implied forward (JPY/CAD)?
No , for options you use the spot price but use trhe implied forward rate for forwards. That is just how I have learnt it
option and forward contract are different things.
option payoff to the long:
(St-X)
great thanks
just thought that for european style option they should be taking forward price… guess not