Question
In: Finance
Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit.
Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is:
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Randy purchased a call option on British pounds for $.02 per unit. The strike price was...
Randy purchased a call option on British pounds for $.02 per
unit. The strike price was $1.45 and the spot rate at the time the
option was exercised was $1.46. Assume there are 31,250 units in a
British pound option. What was Randy’s net profit on this option?
What is the net profit per unit to the seller of this
option?
A speculator purchases a put option for a premium of $2.75, with an exercise price of...
A speculator purchases a put option for a premium of $2.75,
with an exercise price of $70. The stock is presently priced at
$69, and rises to $82 before the expiration date. What is the stock
price at which the speculator would break even?
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?
Consider a European put option on British pounds with an exercise price of $1.60/£. You pay...
Consider a
European put option on British pounds
with an exercise price of $1.60/£. You pay an option premium of
$0.04/£ to buy the put option today. You decide whether to exercise
the put option on the expiration date.
(6 points) In the following table, fill in the option payoff
per pound as well as net profit (or loss) per pound based on the
listed possible spot rates of dollars per pound at expiration (Net
profit or loss = Payoff...
A speculator is considering the purchase of one three-month put option on USD with a strike...
A speculator is considering the purchase of one three-month put
option on USD with a strike price of 97 yen per U.S. dollar. The
premium is 0.24 yen per U.S. dollar. The current spot price is
107.81 yen per U.S. dollar and the 90-day forward rate is 71.46
yen/USD. The speculator believes the USD will depreciate to $1.00
versus 93 yen over the next three months. As the speculator’s
assistant, you have been asked to prepare the followings: 1. Graph...
A put option with a strike price of $65 costs $8. A put option with a...
A put option with a strike price of $65 costs $8. A put option
with a strike price of $75 costs $15. 1) How can a bull spread be
created? 2) With the bull spread created above, what is the
profit/loss if the stock price is $70? 3) With the bull spread
created above, when would the investor gain a positive profit?
A put option with a strike price of $65 costs $8. A put option with a...
A put option with a strike price of $65 costs $8. A put option
with a strike price of $75 costs $15.
1) How can a bull spread be created?
2) With the bull spread created above, what is the profit/loss
if the stock price is $70?
3) With the bull spread created above, when would the investor
gain a positive profit?
Is a put option on the ¥ with a strike price in €/¥ also a call...
Is a put option on the ¥ with a strike price in €/¥ also a call
option on the € with a strike price in ¥/€? Explain.
Given the following: Call Option: strike price = $100, costs $4 Put Option: strike price =...
Given the following:
Call Option: strike price = $100, costs $4
Put Option: strike price = $90, costs $6
How can a strangle be created from these 2 options? What are the
profit patterns from this? Show using excel.
Option Strike Price $ Call Option Price $ Put Option Price $ 45 10.00 1.00 50...
Option Strike Price $
Call Option Price $
Put Option Price $
45
10.00
1.00
50
5.00
2.00
55
1.50
3.00
60
1.00
7.50
Using the quotes from
the table above, an investor makes the following transactions:
(1) buys the stock at
$55, and
(2) writes the
December Call with a strike price of $55.
If the stock
is selling for $62 per share, when the options expire, the
profit from the trades is
closest to a:
.
Multiple Choice...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Kelson Sporting Equipment, Inc., makes two different types of baseball gloves: a regular model and a...
- Write in Python and as 2 seperate programs Write a program that allows the user to...
- Asymptotic Notation. (a) [10 pts.] Prove that n3 −91n2 −7n−14 = Ω(n3). Your answer must clearly...
- Prepare ONE Page reflection to the readings of the Perceptual Process incorporating as well one outside...
- How is the internet affecting our everyday life? I just need a rough draft for this...
- Please explain your view of the most difficult aspect of Customs Compliance?
- You are required to write an interactive program that prompts the user for seven (7) real...
ADVERTISEMENT