Long Call on one unit of Swiss Franc. E=.985 USD/SF P=.5 US cents E= Excise Price...

Long Call on one unit of Swiss Franc. E=.985 USD/SF P=.5 US cents E= Excise Price P=premium

Find the profit and say if it is in the money, at the money or out of the money

Spot Rate	Payoff	Money
0
50
75
87.5
98.5
100
105

Expert Solution

Payoff of a long call option = Max[S-X, 0] - P

S = spot rate at expiry,

X = exercise price

P = premium paid

A call option is in-the-money if the spot rate > exercise price

A call option is out-of-the-money if the spot rate < exercise price

A call option is at-the-money if the spot rate = exercise price

jeff jeffy answered 2 years ago

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