hey guys, can someone please answer this simple options question if i have a call option on ONE YEAR LIBOR with a strike of 3% at expiry LIBOR is 4% notional principle=$1 do i get $0.01 one year after the option expired or will i get the PV of the 0.01 at expiry ? i guess i would be indifferent, but which one actually happens ?
u get the pv of protit discounted at the prevailing rate…
It’s definitely the PV of $0.01, but I’m not sure if you get that, or you pay that!
Don’t you get that $0.01 one year after expiry, but if you want to know the PV of that today then discount it back to today at today’s discount rate?