I have a question with regard to the option pricing - not really a CFA I level topic but I hope someone will help me to understand the issue.
Lets assume situation below (which has actually happened in the past):
Current spot exchange-rate for TRY/EUR = 6.8. Below we have following put options and its prices:
1-day PUT 8.80 (premium of 2.00 TRY for every EUR)
1-month PUT 8.80 (premium of 1.87 TRY for each EUR)
12-month PUT 8.80 (premium 0.80 TRY for every EUR)
My questions is - what might be the reason that options with a longer expiration date are cheaper than those of shorter maturity? (interest rates? economic forecast or macro situation?) I know it’s not a common phenomenon but it seems that it happens.
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