1. A call option on Canadian dollars with a strike price of $.60 is purchased by...

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1. A call option on Canadian dollars with a strike price of $.60 is purchased by a speculator for a pre- mium of $.06 per unit. Assume there are 50,000 units in this option contract. If the Canadian dollar's spot rate is $.65 at the time the option is exercised, what is the net profit per unit and for one contract to the speculator? What would the spot rate need to be at the time the option is exercised for the speculator to break even? What is the net profit per unit to the seller of this option? strike 2. A put option on Australian dollars with price of $.80 is purchased by a speculator for a pre- mium of $.02. If the Australian dollar's spot rate is $.74 on the expiration date, should the speculator exercise the option on this date or let the option expire? What is the net profit per unit to the speculator? What is the net profit per unit to the seller of this put option? t 1. A call option on Canadian dollars with a strike price of $.60 is purchased by a speculator for a pre- mium of $.06 per unit. Assume there are 50,000 units in this option contract. If the Canadian dollar's spot rate is $.65 at the time the option is exercised, what is the net profit per unit and for one contract to the speculator? What would the spot rate need to be at the time the option is exercised for the speculator to break even? What is the net profit per unit to the seller of this option? strike 2. A put option on Australian dollars with price of $.80 is purchased by a speculator for a pre- mium of $.02. If the Australian dollar's spot rate is $.74 on the expiration date, should the speculator exercise the option on this date or let the option expire? What is the net profit per unit to the speculator? What is the net profit per unit to the seller of this put option? t

Answer rating: 100% (QA)

Call Option on Canadian Dollars Strike Price K 060 Premium Paid by Speculator 006 per unit Spot Rate ... View the full answer