Did anybody come up with strategies how to do the calculations of max loss- profit, break even for options ?
I have a q regarding interest rate call option-why do we FV the premium ?
Because you have to measure everything at the same point in time (the call was bought earlier than the loan). Your question about strategies on this stuff has come up a million times. There is only one way to know this stuff – understand what each option is doing, and the payoff and breakeven calculations end up being simple. If you don’t understand the structure of a basic call or put, to the short or the long, you will get nowhere memorizing the thousand formulas in that reading.
When I review them, everything is clear, but later on, I tend to forget how many calls-puts ant what price low/high stuff. That’s what I mean.