Options

CFA Level I
#1

For the exam, please not that while futures, forwards and swaps reveal the price of the underlying as noted “price discovery”. Options on the other hand “DO NOT” reveal prices but do reveal the “VOLATILITY” of the underlying. I don’t know why but I feel like this might be a test question.

#2

Because you can have options at all sorts of strike levels. You can’t use this to deduce a future price, especially if you factor in the use of spreads…

#3

It’s more of a Level II concept NJ.

#4

thanks for the replies…i opened up my derivatives and options book from college…its really quantitative…i just saw this in the reading somewhere in the book and thought it would be one of those “trick” questions.

#5

You are quite well-prepared already NJ. Just make sure you get your sleep cycle right over the next week or so.

#6

Thanks Beatthecfa! I agree, I haven’t been sleeping well. I took off all next week. Hopefully, I should be able to recover. Lol