Interest Rate Option

CFA Level II
#1

What’s the difference between a IR Cap and IR call?

#2

nothing, they are one in the same

#3

thanks, so just to be thorough, they are priced the same way?

#4

essentially yes: (IR Rate - Cap/Call Rate)(n/360)(notional amount) (Floor/Put Rate - IR Rate)(n/360)(notional) **with caplets and floorlets, since they pay in arrears, discount the above results by (1+rate)

#5

Cap is series of IR calls (called caplets)

#6

Thanks a lot, any nice explanation for my question on Eurodollar Futures?

#7

can u post it here, i dont see it