Question

Kiko Peleh writes a put option on Japanese yen with a strike price of $ 0.008000 divided by yen $0.008000/¥ ​( yen 125.00 divided by $ ¥125.00/$​) at a premium of 0.0080 cents 0.0080¢ per yen and with an expiration date six month from now. The option is for ​¥ 12 comma 500 comma 000 12,500,000. What is​ Kiko's profit or loss at maturity if the ending spot rates are yen 110 divided by $ ¥110/$​, yen 116 divided by $ ¥116/$​, yen 121 divided by $ ¥121/$​, yen 125 divided by $ ¥125/$​, yen 130 divided by $ ¥130/$​, yen 134 divided by $ ¥134/$​, and yen 140 divided by $ ¥140/$.

Answer 1

Profit for selling put options = Premium from the option - Payoff from the option

If put options are sold the writer has to pay the amount if the stock price is below the strike price. That will be a negative payoff for the writer.

Payoff to put option seller = Max[( Strike price - Spot price ),0 ]

Premium = 8 cents / yen = 0.00008 dollars / yen

S no	Strike Price	Premium ( Dollar / Yen)	Spot rates ( Yen / Dollars)	Spot rates [ Dollars/YEN = 1 / (YEN /DOLLARS)]	Payoff [ MAX ( Strike price - spot price, 0)]	Profit/loss( Premium - payoff)	Total Profit / loss ( 12500000 * Profit /loss)
1	0.008	0.00008	110	0.00909	0.00000	0.00008	1000.00000
2	0.008	0.00008	116	0.00862	0.00000	0.00008	1000.00000
3	0.008	0.00008	121	0.00826	0.00000	0.00008	1000.00000
4	0.008	0.00008	125	0.00800	0.00000	0.00008	1000.00000
5	0.008	0.00008	130	0.00769	0.00031	-0.00023	-2846.15385
6	0.008	0.00008	134	0.00746	0.00054	-0.00046	-5716.41791
7	0.008	0.00008	140	0.00714	0.00086	-0.00078	-9714.28571