COP4121 - GAMA Enerji: Energy Trading and Investments, 2020-2021 Fall, HW1 Please answer all the questions below, the homework will be weighted as 10% of the overall grade. 1. Please discuss the differences between "balancing entity" and "settlement entity". Please also give at least one example for each type. 2. Moneyness ITM ITM Strike Price 27,00 29,50 32,00 34,50 37,00 39,50 42,00 Call Option Premium $14,25 $10,00 $5,75 $3,25 $2,50 $1,50 $0,75 Intrinsic Value Time Value $13,50 $8,75 $3,75 $3,00 $2,50 $1,50 $0,75 Assume underlying (SPOT) price is USD 37 and you are the owner of Call Option. Current option pricing in the market stated above. Q2.1 Fill "Moneyness" column with ITM/ATM/OTM, explain each three and why you placed where it belongs. Q2.2 Explain "Intrinsic Value" and fill in the blanks at that column. Q2.3 Explain "Time Value" and fill in the blanks at that column. 3. What are the Characteristics of Electricity? What difficulties do these characteristics bring for market structure? COP4121 - GAMA Enerji: Energy Trading and Investments, 2020-2021 Fall, HW1 Please answer all the questions below, the homework will be weighted as 10% of the overall grade. 1. Please discuss the differences between "balancing entity" and "settlement entity". Please also give at least one example for each type. 2. Moneyness ITM ITM Strike Price 27,00 29,50 32,00 34,50 37,00 39,50 42,00 Call Option Premium $14,25 $10,00 $5,75 $3,25 $2,50 $1,50 $0,75 Intrinsic Value Time Value $13,50 $8,75 $3,75 $3,00 $2,50 $1,50 $0,75 Assume underlying (SPOT) price is USD 37 and you are the owner of Call Option. Current option pricing in the market stated above. Q2.1 Fill "Moneyness" column with ITM/ATM/OTM, explain each three and why you placed where it belongs. Q2.2 Explain "Intrinsic Value" and fill in the blanks at that column. Q2.3 Explain "Time Value" and fill in the blanks at that column. 3. What are the Characteristics of Electricity? What difficulties do these characteristics bring for market structure