Question

The Money Markets is the market of short term debt. Hence, a high denomination, low risk...

The Money Markets is the market of short term debt. Hence, a high denomination, low risk and liquid call option expiring in one week is expected to trade in this market.

Is this True or False?

I know everything is true up until the "liquid call option expiring in one week is expected to trade in this market" part. This I don't know about, and I couldn't figure out. Do you know?

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Homework Answers

Answer #1

FALSE: It is mixing up futures & options (F&O) market with money market.
Let’s understand about F&O - A Call Option is In-the-money when the spot price of the asset is higher than exercise price.

A put option is in-the-money when the exercise price is below the strike price.

Option market is a completely different market which is traded on the premium paid on an underlying asset. Whereas in money market highly liquid financial instruments having short maturities are being traded.

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