One year ago, you sold a put option on 35,000 Euros with an expiration date of one year for a premium of $0.03 per unit.

One year ago, you sold a put option on 35,000 Euros with an expiration date of one year for a premium of $0.03 per unit. The exercise price was $1.25/Euro. Assume that one year ago, the spot rate of the Euro was $1.23, the one-year forward rate was $1.24. Today, the euro spot rate is $1.21.

Determine the total dollar amount of your net profit or loss in the put option.

Expert Solution

Put option strike, X = $1.25/Euro

The euro spot rate today, St = $1.21/Euro

Total premium = $0.03 * 35,000 = $1,050

Profit = -max(X - St, 0) * Contract size + Total premium collected

Profit = -max(1.25 - 1.21, 0) * 35,000 + 1,050

Ptofit = -0.04 * 35,000 + 1,050

Profit = -$350

Or loss = $350

jeff jeffy answered 2 years ago

One year ago, you bought a put option on 200,000 euros with an expiration date of...

One year ago, you bought a put option on 200,000 euros with an expiration date of one year. You paid a premium on the put option of $.05 per unit. The exercise price was $1.32. Assume that one year ago, the spot rate of the euro was $1.29, the one-year forward rate exhibited a discount of 3%, and the one-year futures price was the same as the one-year forward rate. From one year ago to today, the euro depreciated against...

The premium on a pound put option is $.03 per unit. The exercise price is $1.60....

The premium on a pound put option is $.03 per unit. The exercise price is $1.60. The break-even point is _______ for the buyer of the call, and _______ for the seller of the call. (Assume zero transactions costs and that the buyer and seller of the put option are speculators.) $1.57; $1.57 $1.63; $1.63 $1.63; $1.57 $1.57; $1.63

Assume that a British pound put option has a premium of $.03 per unit and an...

Assume that a British pound put option has a premium of $.03 per unit and an exercise price of $1.60. The present spot rate is $1.61. The expected future spot rate on the expiration date is $1.52. The option will be exercised on this date, if at all. What is the expected per unit net gain (or loss) resulting from purchasing the put option?

You bought one of the $100 Apple put option contracts with a premium of $3.69. You...

You bought one of the $100 Apple put option contracts with a premium of $3.69. You kept your position until the expiration date, when Apple stock sells for $91.68, at that point you have a profit of $_____________ from this transaction. Recall that each contract includes 100 shares. Enter a negative number for losses. Enter your answer in the box below. Round your answer to two decimals.

5. You buy a put option on Swiss Francs (SFr) for a premium of $0.01 per...

5. You buy a put option on Swiss Francs (SFr) for a premium of $0.01 per SFr, with an exercise price of $0.95. If at the maturity date, the spot rate is $0.91, (a) What is your net profit (or loss) per unit of SFr at the maturity date? (b). Draw a net profit graph for buying this put option. (c). Draw a net profit graph for selling this put option.

A put option to sell 62,500 Euros in three months for $0.9200/€ (strike price) has a premium of 1.52 cents

A put option to sell 62,500 Euros in three months for $0.9200/€ (strike price) has a premium of 1.52 cents per Euro. If the spot rate on the expiration date of the option is $0.9000/€, what is the overall profit/loss of the put writer?• zero• $300• $1250• $950

You are to calculate a put option (European) that has 3 months left to expiration. The...

You are to calculate a put option (European) that has 3 months left to expiration. The underlying stock does NOT pay dividends and both the stock price and exercise price happen to be equal at $50. If the risk free rate is currently 10% per annum, and the volatility is assessed at 30% per annum, what is the change if a dividend of $1.50 is expected to be paid in two months?

You bought a stock one year ago for $ 50.14 per share and sold it today...

You bought a stock one year ago for $ 50.14 per share and sold it today for $ 58.83 per share. It paid a $ 1.74 per share dividend today. If you assume that the stock fell $ 7.42 to $ 42.72 instead: a. Is your capital gain different? Why or why not? b. Is your dividend yield different? Why or why not?

You buy a European call option for a stock. The premium paud for this put option...

You buy a European call option for a stock. The premium paud for this put option is $15. The pricd is $200. You are now at the maturity of this option. (a) If the price at maturity is $210, what is the optimal decision? Calculate and explain possible choices. (b) What are the profits/losses for the seller of this option? Explain. (c) What is the breakeven point? Explain.

Consider a call option with an exercise price of $110 and one year to expiration. The...

Consider a call option with an exercise price of $110 and one year to expiration. The underlying stock pays no dividends, its current price is $110, and you believe it has a 50% chance of increasing to $120 and a 50% chance of decreasing to $100. The risk-free rate of interest is 10% What is the hedge ratio? What is the value of the riskless (perfectly hedged) portfolio one year from now? What is the value of the call option...

Question