Doctor Dumpkins is bullish on the British pound so he sells a one-month put for $0.03. The strike price of the call is $1.24. On the expiration day, the spot price of the British pound is $1.27. Calculate the break-even price, the option payoff at expiration, and the net profit at expiration.
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Doctor Dumpkins is bullish on the British pound so he sells a one-month put for $0.03. The strike price of the call is $1.24.
On the expiration day, the spot price of the British pound is $1.27. Calculate the break-even price, the option payoff at expiration, and the net profit at expiration.
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- A speculator is considering the purchase of a 6-month Swiss franc call option on 50,000 francs with a strike price of $1.0885/SFr The premium is $0.0075/Sfr. The spot price is $1.0822/Sfr and the 60-day forward rate is $1.0880/SFr. The speculator believes the Franc will appreciate to $1.0994/Sfr over the next six months. What is the profit or loss if the franc appreciates only to the forward rate at the end of the 6 months? A. $170 B. -$235 C. $450 D -$375Jobbar sold a put option on British pounds for €.035 per unit. The exercise price was €1.1370, and the spot rate at the time the pound option was exercised was €1.1218. Assume there are 150,250 units in a British pound option. What was Jobbar's per-unit net profit on the option? What was Jobbar's total net profit on the option? Calculate the break-even spot rate (at expiration) for Jobbar. Discuss (briefly) the answer.David Agbo is considering buying ten call options on Swiss franc on the Philadelphia Stock Exchange at a strike price of 54 cents per pound. The contract size is SF62, 500. The option will expire in three months. The premium is 2.0 cents per pound. Ignorethe brokerage cost. The spot rate is currently $.5400/SF and the three-month forward rate is $.5525/SF. David Agbo believes that the most likely range for the spot pound in three months will be a low of $.5000/SF to a high of $.6200/SF, but the most likely valuewill be $.5900/SF.(a) Diagram the profit and loss position as perceived by David Agbo. (b) Calculate what he would gain or lose at his expected range of future spot prices and at his expected future spot price. (c) Calculate and show on the diagram the breakeven future spot price.
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