Suppose that you are a speculator that anticipates an appreciation of the Singapore dollar (S$). You...
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Suppose that you are a speculator that anticipates an appreciation of the Singapore dollar (S$). You purchase a call option contract on Singapore dollars. Each contract represents S$25,000, with a strike price of $0.86 and call option premium of $0.02 per unit. Suppose that the spot price of the Singapore dollar is $0.92 just before the expiration of the call option contract. At this time, you call the contract and immediately sell the Singapore dollars to a bank at the current spot price. Now consider this scenario from the perspective of the individual or firm that sold you the call option. Note: Assume there are no brokerage fees. Use the drop-down selections to fill in the following table from the sellers perspective. Transaction Selling Price of S$ - Purchase Price of S$ + Premium Paid for Option = Net Profit Per Unit $0.86 -$0.92 $0.02 Per Contract Suppose that you are a speculator that anticipates an appreciation of the Singapore dollar (S$). You purchase a call option contract on Singapore dollars. Each contract represents S$25,000, with a strike price of $0.86 and call option premium of $0.02 per unit. Suppose that the spot price of the Singapore dollar is $0.92 just before the expiration of the call option contract. At this time, you call the contract and immediately sell the Singapore dollars to a bank at the current spot price. Now consider this scenario from the perspective of the individual or firm that sold you the call option. Note: Assume there are no brokerage fees. Use the drop-down selections to fill in the following table from the sellers perspective. Transaction Selling Price of S$ - Purchase Price of S$ + Premium Paid for Option = Net Profit Per Unit $0.86 -$0.92 $0.02 Per Contract
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