I’m reading Option - American and European options on forwards and futures(53.j) and it says “Becasue there is no mark to market on forwards, early exercise does not accelerate the payment of any gains”
Why forward can’t mark to market? Understand from reading 51 and currency part we still can base on the market price of relative asset to determine the forward contract price.
Thanks for help.
Forwards _ can be _ marked to market, but typically they’re not. If they are, then you’d reach the same conclusion as you would for futures.
So schweser page89 (53j) - The value of American and European options on forwards are the same. Should be incorrect?
It should depend on if we want to mark to market the forward and terminate the forward contract if we want.
As I say, typically forwards aren’t market to market; that’s the default assumption.