Speculating with Currency Straddles Maggie Hawthorne is a currency speculator. She has noticed that recently the euro has appreciated substantially against the U.S. dollar. The current exchange rate of the euro is $1.15. After reading a variety of articles on the subject, Maggie believes that the euro will continue to fluctuate substantially in the months to come. Although most forecasters expect that the euro will depreciate against the dollar in the near future, Maggie thinks that there is also a good possibility of further appreciation. Currently, a call option on euros is available with an exercise price of $1.17 and a premium of $0.04. A euro put option with an exercise price of $1.17 and a premium of $0.03 is also available. (See Appendix B in this chapter.)
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