Also. Shouldn't he be shorting the forward and buying the underlying It should be a short forward position combined with a buying the underlying Like he himself said in the beginning of the video
Yup! Even though this reply is a little bit late, I hope it can still be useful: for forwards/futures, you just entre the contract with no upfront payment, and signing the contract means that you have the OBLIGATION of selling/buying the underlying asset at maturity. However, for options, you do have to pay for the price of it, and it is not a contract, you have the RIGHT BUT NOT OBLIGATION to buy/sell the underlying asset at maturity.
![ทุกครั้งที่หลับตา (Lucid Dream) - AYLA's [ Official MV ]](http://i.ytimg.com/vi/4i1OBAQyv58/mqdefault.jpg)
It's so easy to understand. it helps me a lot. Thank you for your great explanation.
you have to pay a premium to short a forward contract therefore there must be cash outflow at t=0.
Only put and call options need premiums, not forwards.
Interesting, short and clear!
Wow, too good
simple and clear. thank you !!!!
You're welcome!
Nice graphics
really good content
best explanation ....
7:01 Shouldn't it be the investor agrees to buy, not sell, the stock at $103 one year later? 😂
Thank God. I thought I was the only one.
Also. Shouldn't he be shorting the forward and buying the underlying
It should be a short forward position combined with a buying the underlying
Like he himself said in the beginning of the video
short forward at t=0, just meaning the positin, not meaning really 'selling forward', correct? the selling forward only happens at t=T? thanks!
Yup! Even though this reply is a little bit late, I hope it can still be useful: for forwards/futures, you just entre the contract with no upfront payment, and signing the contract means that you have the OBLIGATION of selling/buying the underlying asset at maturity. However, for options, you do have to pay for the price of it, and it is not a contract, you have the RIGHT BUT NOT OBLIGATION to buy/sell the underlying asset at maturity.
What always got me about this is that its all based on the risk free rate. But who can actually borrow at the risk free rate?
well, If you bought t bills you pretty much borrowed at the risk free rate
@@mustafael-dardeery4804 you lend when u buy t bills...not borrow
i wish i can give a hundred likes👌
Very helpful!!
Nicely explained