Suppose Darlene is a speculator who buys five British pound call options with a strike price...
Suppose Darlene is a speculator who buys five British pound call options with a strike price of $1.50 and a March expiration date. The current spot price is $1.45 Darlene pays a premium of $0.01 per unit for the call option. Just before expiration, the spot price reaches $1.53 and Darlene exercises the option. Assume one option contract specifies 31,250 units. What is the profit or loss for Darlene?
Homework Answers
Suppose Darlene is a speculator who buys five British pound call options with a strike price of $1.50 and a March expiration date. The current spot price is $1.45 Darlene pays a premium of $0.01 per unit for the call option. Just before expiration, the spot price reaches $1.53 and Darlene exercises the option. Assume one option contract specifies 31,250 units. What is the profit or loss for Darlene?
Profit on the contract is calculated by solving the following equation:
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