R25 Fixed Income Portfolio Mgt II
Credit Spread Option-
Payoff calculation= Max[(Spread at the option maturity-K) X Notional Amt X Risk Factor,0]
------ I don’t understand why the premium paid is not as a part of the consideration??
2009 Mock exam has questions provide the premium but didn’t incl in the payoff calculation… (But unfortunately I include…>
R37 Risk mgt Application of Option Strategies
eg, Bull call strategies.
Payoff= Max (0x ST-XL)-Max…-CL0+CH0
------ here counts all the premiums…
Maybe I am in the final stage… feeling stress& confused…
Pls someone can help?