Question: Consider a call option contract on Euro with an exercise price of $1.15/Euro. The contract size is 250,000 Euro. Premium = $0.01 per each Euro.

Consider a call option contract on Euro with an exercise price of $1.15/Euro.

The contract size is 250,000 Euro. Premium = $0.01 per each Euro.

a) If the exchange at expiration (ST) = $1.15/Euro, what is the profit/loss on the long position?

b) If the exchange at expiration (ST) = $1.13/ Euro what is the profit/loss on the long position?

c) What is the breakeven exchange rate (ST) for the long position holder?

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