What is the value of a regular call option on silver futures

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Reference no: EM131240135

In a 3-month down-and-out call option on silver futures the strike price is $20 per ounce and the barrier is $18. The current futures price is $19, the risk-free interest rate is 5%, and the volatility of silver futures is 40% per annum.

Explain how the option works and calculate its value.

What is the value of a regular call option on silver futures with the same terms?

What is the value of a down-and-in call option on silver futures with the same terms?

Reference no: EM131240135

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