How can I use the tool for options on stock indices , currencies and futures?
These options are handled by the tool as follows: Options on foreign currencies: Set the continuous dividend yield for the currency option (just as you would for an equity option) equal to the foreign risk-free rate. This is because holding foreign currency, which will pay you interest at the foreign risk free rate, is analogous to holding stock paying a continuous dividend. Options on both these underlying assets are handled in the same way. Options on stock indices: Set the continuous dividend yield for the index option equal to the average dividend yield on the stocks in the index. Options on futures: Set the continuous dividend yield for the option on the futures contract equal to the risk-free rate. Then select European or American pricing in the normal way.
