Question

Kiko Peleh's Puts. Kiko Peleh writes a put option on Japanese yen with a strike price of $0.008000 /¥ ( 125.00/$) at a premium of 0.0080¢ per yen and with an expiration date six month from now. The option is for $12,500,000. What is Kiko's profit or loss at maturity if the ending spot rates are ¥110/$, ¥116/$, ¥119/$, ¥124/$, ¥130/$, ¥136/$, and ¥139/$. Kiko's profit or loss at maturity if the ending spot rate is \110/$ is $ (Round to the nearest cent and indicate a loss by using a negative sign.) Kiko's profit or loss at maturity if the ending spot rate is \116/$ is $ (Round to the nearest cent and indicate a loss by using a negative sign.) Kiko's profit or loss at maturity if the ending spot rate is ¥119/$ is $ (Round to the nearest cent and indicate a loss by using a negative sign.) Kiko's profit or loss at maturity if the ending spot rate is ¥124/$ is $ (Round to the nearest cent and indicate a loss by using a negative sign.) Kiko's profit or loss at maturity if the ending spot rate is \130/$ is $ (Round to the nearest cent and indicate a loss by using a negative sign.) Kiko's profit or loss at maturity if the ending spot rate is ¥136/$ is $| (Round to the nearest cent and indicate a loss by using a negative sign.) Kiko's profit or loss at maturity if the ending spot rate is \139/$ is $ (Round to the nearest cent and indicate a loss by using a negative sign.)

Answer 1

Assumptions	a) Values	b) Values	c) Values	d) Values	e) Values	f) Values	g) Values
Notional principal	12,500,000	12,500,000	12,500,000	12,500,000	12,500,000	12,500,000	12,500,000
Maturity (days)	180	180	180	180	180	180	180
Strike price	$0.008000	$0.008000	$0.008000	$0.008000	$0.008000	$0.008000	$0.008000
Premium	$0.000080	$0.000080	$0.000080	$0.000080	$0.000080	$0.000080	$0.000080
Ending spot rate	110	116	119	124	130	136	139
in US$/ Yen	0.009091	0.008621	0.008403	0.008065	0.007692	0.007353	0.007194
Gross profit on option	$0.000000	$0.000000	$0.000000	$0.000000	$0.000308	$0.000647	$0.000806
Less premium	($0.000080)	($0.000080)	($0.000080)	($0.000080)	($0.000080)	($0.000080)	($0.000080)
Net profit	($0.000080)	($0.000080)	($0.000080)	($0.000080)	$0.000228	$0.000567	$0.000726
Net profit total	($1,000)	($1,000)	($1,000)	($1,000)	$2,850	$7,087.5	$9,075