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In derivatives, the forward price of an option is calculated by adding the current price of the underlying asset to the intrinsic value of the option. The intrinsic value represents the immediate profit if the option were exercised at that moment, while the underlying asset price reflects its current market value. Together, they determine the forward price, which is used to assess the option’s fair value in future contracts. Other terms like exercise price, book value, or spot price do not represent this calculation.
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