Option Premiums
On any screen shot of American currency options is a view of volume, futures price, option price, and strike price for each option offered. American currency options trade at premiums in half-point strike price increments and represent 85 percent of total CME volume (CME Options Rulebook). Premiums are quoted in U.S. dollar points per foreign currency. The notional values equal the same underlying price convention, $12.50 euro, $62,500 British pounds.
The formula to determine premium is:
For example, a 1.4430 euro/U.S. dollar call option bid at 75×150 contracts is equal to 0.0075 multiplied by $125,000 equals $937.50. To sell the ...
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