MEDA Corporation bought five (5) put options on British pound for a premium of US$0.045/£ per unit. The strike price was US$1.3500/£ and the spot rate at the time the British pound options were exercise was US$1.3800/£. What was MEDA Corporation’s net profit (loss) on these options? (British pound options are £10,000 per contract). Advise MEDA Corporation whether they should exercise the put options or not?

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AnswerIn this case MEDA Corporation bought five 5 put options at strike price was US13500 b... View the full answer