Question

5. Assume a call option on euros is written with a strike price of $1.2500/€ at a premium of 3.80¢ per euro ($0.0380/€) and with an expiration date three months from now. The option is for €100,000. Calculate your profit or loss (in each of the following scenarios) when the euro is traded at the following spot rates: (1) $1.12/€ (2) $1.24/€ (3) $1.32/€? (4) $1.36/€

Answer #1

Assume a put option on euros is written with a strike price of
$1.0800/€ at a premium of $0.0038/€ and with an expiration date
three months from now. The option is for €100,000. Calculate your
profit or loss should you exercise before maturity at a time when
the euro is traded spot at $1.2500/€, $1.0100/€, $1.1000/€,
$1.2500/€.

Assume that you buy a call option on euros with a strike price
of $1.25/€ at a premium of 3.80 cents per euro ($0.0380/€) and an
expiration in three months. The option is for €100,000. Calculate
your total profit or loss if you exercise when the euro spot rate
is each of the following: $1.10/€, $1.20/€, $1.30/€, $1.40/€

a. A speculator purchased a call
option on Japanese Yen at a strike price of $0.70 and for a
premium of $.06 per unit. At the
time the option was exercised if the Japanese Yen spot
rate was $.75
a) Find the speculator’s net profit
per unit?
b) If each contract is made up of
62500 units what is the net profit per contract?
c) At which spot price will the
speculator break even?
d) What is the...

Citigroup buys a call option
on euros (contract size is €600,000) at a premium of $0.02 per
euro. If the exercise price is $1.44/€ and the spot price of the
euro at date of expiration is $1.48/€,
A. Will this option be exercised, that is, is in-the-money
or out-of-the-money? Why? (2 points)
B. What is Citigroup's profit (or loss) on the call
option? (3 points)

A call option on the euro expiring in Six months has an exercise
price of $1.00 and is priced at $ 0.0385. Construct a simple long
position in the call. determine the profit from the following basic
foreign currency option transactions for each of the following spot
rates at expiration: $0.90, $0.95, $1.00, $1.05, and $1.10.
Construct a profit graph. Find the breakeven spot rate at
expiration. Assume that each contract covers 100,000 euros.
(Show answers in Excel if possible)

Suppose a trader buys a call option with a strike price of $30
and a premium of $3.03. When the option was purchased (three months
previous), the stock traded for $31/share. At expiration, the stock
traded for $38/share. What is the traders net profit or loss, per
share? (Type just the number to two decimal places in the response
box, without commas, dollar signs or percent signs. Do not enter
commas but use negative sign if necessary

You buy a call option and buy a put option on bond X. The strike
price of the call option is $90 and the strike price of the put
option is $105. The call option premium is $5 and the put option
premium is $2. Both options can be exercised only on their
expiration date, which happens to be the same for the call and the
put.
If the price of bond X is $100 on the expiration date, your...

You wish to buy a Euro Call Option expiring in 6 months with a
strike price of $1.35. The volatility of the $/Euro exchange rate
is expected to be 8.36% on an annualized basis. Currently the
interest rate on the euro is currently 0.00% whereas it is 1.5% on
the dollar. What is the price of this call option? What is
corresponding Put Option worth? What happens to the price of both
the Call and Put Option when the volatility...

A nine-month dollar-denominated call option on euros with a
strike price of $1.30 is values at $0.06. A nine-month
dollar-dominated put option on euros with the same strike price is
valued at 0.18. The current exchange rate is $1.2/euro and the
continuously compounded risk-free rate on dollar is 7%. What is the
continuously compounded risk-free rate on euros?
Formulas would be greatly appreciated

The price of a stock is $61 and a call option with a strike
price of $60 sells for $5 (i.e.,
the option premium is $5.). *SHOW WORK*
(a) What is the option’s intrinsic value?
(b) What is the option’s time premium?
(c) You purchased the call for $5. If, at the expiration of the
call, the price
of the stock is $66, what is the profit (or loss) from buying
the call?
(d) You purchased the call for $5....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 12 seconds ago

asked 5 minutes ago

asked 17 minutes ago

asked 18 minutes ago

asked 24 minutes ago

asked 27 minutes ago

asked 33 minutes ago

asked 33 minutes ago

asked 39 minutes ago

asked 44 minutes ago

asked 56 minutes ago

asked 1 hour ago