Reading 15 - Exhibit 8

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I’m looking over exhibit 8 on page 237. I understand that gamma is largest ATM. Exhibit 8 (book 3), the largest gamma value is at share price 15 which is not ATM. ATM is 16. Is this a mistake?
Thanks anybody in advance.
 
Can you give us a snippet of the actual exhibit and or problem? There could be a lot of missing context here.
 
Gamma is always highest at St=X. Period. But obvious at St=15, it will still have very high gamma but not the peak one. No need for further explanation
 
HerbsDelite wrote: Gamma is always highest at St=X. Period.
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Interestingly, I was just creating a graph of gamma from the BSM model and it appears that this isn’t true, period or not.
I have a call option with a strike price of USD 25 and one year to expiry; gamma is highest at USD 21.40, not USD 25.
Note that this is consistent with the graph in the exhibit: the maximum gamma occurs when the option is somewhat out of the money.
I’m e-mailing CFA Institute about this.
 
So the graph is correct but the written logic in the text is incorrect?
 
Another_attempt wrote: So the graph is correct but the written logic in the text is incorrect?
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According to what I worked out in Excel, it appears so.
We’ll see what the authors of that reading have to say.
 
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