PLEASE SHOW WORK You purchased $10,000,000 worth of $/Euro $1.1255 call option that matures in 6...
PLEASE SHOW WORK
You purchased $10,000,000 worth of $/Euro $1.1255 call option that matures in 6 months. The premium is $0.0225. How much money would you make/loos if the spot rate in 6 months is $1.1565?
PLEASE SHOW WORK
Homework Answers
Call option is the right to buy the the underlying asset at a specified price on a future date.
Since the Strike price is lower than the market price at maturity, the option will be exercised.
Profit = (Market price at maturity - Strike price - Premium paid)*Number of units
= (1.1565 - 1.1255 - 0.0225)*10,000,000
= $85,000
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