A speculator buys an Australian dollar put option (with a strike price of $0.85) at $0.035 per unit. An Australian dollar option represents 10,000 units. At the time of purchase, the Australian dollar spot rate is $0.86 and rises continuously to $0.90 on the expiration date . What is the highest possible net profit for the speculator based on the above information?

Answer rating: 100% (QA)

First lets calculate the profit per unit of the put option at expir... View the full answer