The put option written on € with exercise price of $1.30/€ is in-the-money if the spot...
The put option written on € with exercise price of $1.30/€ is in-the-money if the spot rate is $1.32/€.
Homework Answers
The statement is false as put is in the money when exercise price is more than spot rate
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The put option written on € with exercise price of $1.30/€ is
in-the-money if the spot...
John sold a put option on Euro for $.02 per unit. The strike price was $1.30,...
John sold a put option on Euro for $.02 per unit. The strike price was $1.30, and the spot rate at expiration date was $1.27. Also assume that there are 100,000 units in a Euro option. What was John’s net profit on the put option at expiration date?
3. For a PUT option that is out of the money, is the strike /exercise price...
3. For a PUT option that is out of the money, is the strike /exercise price above or below the stock market price?
A put option on Euro has a strike (exercise) price of $0.56/€. This put option is...
A put option on Euro has a strike (exercise) price of $0.56/€. This put option is referred to as “Out of the money” if the exchange rate ___________. a. is below $0.56/€. b. is at $0.56/€. c. is above $0.56/€. d. None of the above.
13. The premium on a pound put option is $.03 per unit. The exercise price is...
13. The premium on a pound put option is $.03 per unit. The exercise price is s1.60. The break-even point for the buyer and seller is? (Assume put option are speculators.) zero transactions costs and that the buyer and seller of the 14. You purchase a call option on pounds for a premium of $.03 per unit, with an exercise price of $1.64; the option will not be exercised until the expiration date, if at all. If the spot rate...
A put option is said to be in –the money if the: A. exercise price is less than the share price B. exercise price is greater than the share price C. exercise price is equal to the share price D. price...
A put option is said to be in –the money if the: A. exercise price is less than the share price B. exercise price is greater than the share price C. exercise price is equal to the share price D. price of the put is higher than the price of the call
Money Market Versus Put Option Hedge. Narto Co. (a U.S. firm) exports to Switzerland and expects...
Money Market Versus Put Option Hedge. Narto Co. (a U.S. firm) exports to Switzerland and expects to receive 500,000 Swiss francs in one year. The one-year U.S. interest rate is 5% when investing funds and 7% when borrowing funds. The one-year Swiss interest rate is 9% when investing funds, and 11% when borrowing funds. The spot rate of the Swiss franc is $.80. Narto expects that the spot rate of the Swiss franc will be $.75 in one year. There...
• Short currency strangle . Call option premium - $0.03/€, Put option premium - $0.028€ Call...
• Short currency strangle . Call option premium - $0.03/€, Put option premium - $0.028€ Call option strike price = $1.15/€, Put option strike price - $1.05/€ Option contract size = €62,500 Draw graphs of call option, put option, and straddle • Mark BE point and Strike prices • Mark each premium $1.05/€ $1.10/€ $1.15/€ | $1.20/€ $1.25/€ $1.30/€ Spot exchange rate Does holder exercise? Sell call option Holder's net profit per unit Seller's net profit per unit Does holder...
. Assume the following for a stock and a call and a put option written on...
. Assume the following for a stock and a call and a put option written on the stock. EXERCISE PRICE = $20 CURRENT STOCK PRICE = $22 VARIANCE = .25 Standard Deviation = .50 TIME TO EXPIRATION = 4 MONTHS T = .33 RISK FREE RATE = 3% Use the Black Scholes procedure to determine the value of the call option and the value of a put.
• Long cury strangle Call option premium - 50.03., Put option premium - $0.02 € Call...
• Long cury strangle Call option premium - 50.03., Put option premium - $0.02 € Call option strike price 1.25/6, Put option strike price $1.15 € Option contract size - €62,500 Draw graphs of call option, put option, and straddle Mark BE point and Strike prices Mark each premium 1 S105 S 15E $1.20 € $1.25 € $1.30/E Long call option Spot exchange rate Exercise (NY) Holder's net profit per unit Exercise (NY Holder's net profit per unit Net profit...
4. Assume the following for a stock and a call and a put option written on...
4. Assume the following for a stock and a call and a put option written on the stock. EXERCISE PRICE = $20 CURRENT STOCK PRICE = $22 VARIANCE = .25 TIME TO EXPIRATION = 4 MONTHS RISK FREE RATE = 3% B) Use the Black Scholes procedure to determine the value of the call option and the value of a put.
3. For a PUT option that is out of the money, is the strike /exercise price above or below the stock market price?
13. The premium on a pound put option is $.03 per unit. The exercise price is s1.60. The break-even point for the buyer and seller is? (Assume put option are speculators.) zero transactions costs and that the buyer and seller of the 14. You purchase a call option on pounds for a premium of $.03 per unit, with an exercise price of $1.64; the option will not be exercised until the expiration date, if at all. If the spot rate...
• Short currency strangle . Call option premium - $0.03/€, Put option premium - $0.028€ Call option strike price = $1.15/€, Put option strike price - $1.05/€ Option contract size = €62,500 Draw graphs of call option, put option, and straddle • Mark BE point and Strike prices • Mark each premium $1.05/€ $1.10/€ $1.15/€ | $1.20/€ $1.25/€ $1.30/€ Spot exchange rate Does holder exercise? Sell call option Holder's net profit per unit Seller's net profit per unit Does holder...
• Long cury strangle Call option premium - 50.03., Put option premium - $0.02 € Call option strike price 1.25/6, Put option strike price $1.15 € Option contract size - €62,500 Draw graphs of call option, put option, and straddle Mark BE point and Strike prices Mark each premium 1 S105 S 15E $1.20 € $1.25 € $1.30/E Long call option Spot exchange rate Exercise (NY) Holder's net profit per unit Exercise (NY Holder's net profit per unit Net profit...
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