QUESTION2 (25 MARKS) You are bullish on the USD and decide to long call position with exercise
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QUESTION2 (25 MARKS)
You are bullish on the USD and decide to long call position with exercise price rate CAD1.30 and premium rate at CAD0.04
a) Calculate the payoff for the range of spot price. Complete the table below.
b) Show the diagram/graph of LONG call to support your answer in (a).
Position | Exercise price | Future spot price | Action taken | Payoff | ITM/ATM/ OTM |
Long CALL | CAD1.50 | ||||
Long CALL | CAD1.34 | ||||
Long CALL | CAD1.30 | ||||
Long CALL | CAD1.90 | ||||
Long CALL | CAD2.10 | ||||
Long CALL | CAD1.10 | ||||
Long CALL | CAD1.15 |
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