Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike.

Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 5ST

See similar textbooks

Similar questions

i) Abdul sold a call option on British pounds for $.05 per unit. The exercise price was $1.80, and the spot rate at the time the pound option was exercised was $1.92. Assume there are 31,250 units in a British pound option contract. What was Abdul’s per unit net profit on the option contract? What was Abdul’s total net profit on the option contract? Calculate the break-even spot rate (at expiration) for Abdul. ii) Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike.
Mike purchased a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.59. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike. Discuss (briefly) the answer. Add necessary graphs to your discussion
Jobbar 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.
You purchased a put option on British pounds for RM0.06 per unit. The strike price was RM5.60 and the spot rate at the time the pound option was exercised was RM5.68. Assume there are 47,580 units in a British pound option. What was your net profit on the option？
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.
i) Abdul sold a call option on British pounds for $.05 per unit. The exercise price was $1.80, and the spot rate at the time the pound option was exercised was $1.92. Assume there are 31,250 units in a British pound option contract. What was Abdul’s per unit net profit on the option contract? What was Abdul’s total net profit on the option contract? Calculate the break-even spot rate (at expiration) for Abdul. Discuss (briefly) the answer. Add necessary graphs to your discussion. ii) Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike. Discuss (briefly) the answer. Add necessary graphs to your discussion.
You purchased a put option on Australian dollars for RM0.02 per unit. The strike price was RM4.25, and the spot rate at the time the option was exercised was RM4.38. Assuming that there are 13,830 units in the Australian dollar option.Would you exercise the option? What will your net profit on the put option？
A speculator purchases a put option on British Pounds for 0.05$ per unit; the strike price is 1.50$. A pound option represents 31.250 units Assume that at the time of the purchase, the spot rate of the pound is 151$ and continually rises to 1.62$ by the expiration date. 1. Compute the highest net profit possible for the speculator based on the information above? 2. Compute the highest profit/loss for the seller of this put option
Three months ago, you sold a put option contract on Swiss franc with a strike price of $.60/SF and an option price of $.0060 per SF. Contract size is 10,000 SF. The option expires today when the value of Swiss franc is $.625. What is your total profit or loss on your investment? A. -$310 B. -$60 C. $0 D. $60
I purchased a call option on Canadian dollar for $.018 per unit. The strike price was $.08 and the spot rate at the time the option was exercised was $.082. Assume there are 50,000 units in a Canadian dollar option. What was my net profit on this option
A speculator has purchased United States dollar put options, with an exercise price of A$1.30and a premium of A$0.05 per unit.(a) Calculate the break-even price.(b) Calculate the profit or loss of the option for the speculator if the spot rate at the time the speculator considers exercising the options is : (1) A$1.20 (2) A$1.28 (3) A$1.34.(c) What is the maximum profit and maximum loss for the speculator?
You have entered in a put option contract on British pound at a price of $0.04 per British pound. When the option was exercised the dollar was selling of 0.63 British pound. Compute your net profit from the option if the exercise price was $1.80 and size of option is 50,000. a. $8,634. b. Pound 8,634. c. $56,5 d. Pound 56,5 00009292d 56,500