Spot exchange rate in 3 months is $1.27/. What is the net profit per unit? Short Currency

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Spot exchange rate in 3 months is $1.27/. What is the net profit per unit?

Short Currency strangle

Call option premium: $0.03/

Put option premium : $0.02/

Call option strike price: $1.25/

Put option strike price: $1.05/

Maturity = 3 months

The correct answer is $0.03/, how is this achieved? Show working

Related Book For answer-question

Market Practice In Financial Modelling

ISBN: 9789814366540

1st Edition

Authors: Tan Chia Chiang

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Posted Date: Apr 04, 2024 04:06 AM

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Spot exchange rate in 3 months is $1.27/. What is the net profit per unit? Short Currency

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Expert Answer:

Youre absolutely right In a short strangle strategy the maximum net profit is indeed achieved by con... View the full answer

Market Practice In Financial Modelling

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