Question: please answer all parts and draw the digram if possible for options 1.From the perspective of the writer of a put option written on 62,500.

please answer all parts and draw the digram if possible for options

1.From the perspective of the writer of a put option written on 62,500. If the strike price is $1.55/, and the option premium is $1,875, at what exchange rate do you start to lose money?

2.The current spot exchange rate is $1.55 = 1.00 and the three-month forward rate is $1.60 = 1.00. Consider a three-month American call option on 125,000 with a strike price of $1.50 = 1.00. If you pay an option premium of $4,000 to buy this call, at what exchange rate will you break-even?

3. You sold a put option for 125,000. The exercise price is $1.8/. The option premium is $0.05/.

a.Please draw the profit diagram for your total position. Show the total premium as well as the break-even point.

b.If the exchange rate in three months is $1.50/, what would be your profit/loss?

c.If instead, the exchange rate in three months is $1.77/, what would be your profit/loss?

d.If instead, the exchange rate in three months is $1.95/, what would be your profit/loss?

4. You have a short position in at a price of $1.5/. You also sold a put option on with an option premium of $0.05 a share and an exercise price of $1.48/. What will be your total profit/loss per euro from these two positions if the exchange rate on the expiration date is:

  1. $1.35/
  2. $1.55/

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