Question: Call options enable holders to make money when the underlying currency rises in value. Put options enable holders to make money when the underlying currency

Call options enable holders to make money when the underlying currency rises in value. Put options enable holders to make money when the underlying currency falls in value. An investor holding both calls and puts can therefore make money under both conditions (rising or falling markets). Evaluate the preceding statements by using the following two options: (a) EUR call with strike price of USD 1.50 and a premium of USD 0.02 and (b) a EUR put with a strike price of USD 1.50 and a premium of USD 0.03. Construct a spreadsheet, and use values of USD per EUR ranging from 1.20 to l.80 in 0.05 increments. Calculate the profits and graph the results (profit versus spot rate).

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