Question: PLEASE EXPLAIN ALL STEPS AND INFORMATION ON HOW TO ANSWER THIS AND WHY THE ANSWER IS CORRECT, NOT JUST ANSWER THE QUESTION. THANK YOU SO

PLEASE EXPLAIN ALL STEPS AND INFORMATION ON HOW TO ANSWER THIS AND WHY THE ANSWER IS CORRECT, NOT JUST ANSWER THE QUESTION. THANK YOU SO MUCH.

1.Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.07 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is:

A.$2187.5

B.$-2187.5

C.$3437.5

D.$1250.0

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