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21. (Suppose you sell a call option with Co =$0.03/ and X = $1.8/ , and sell a put option with P, =$0.02/ and X
21. (Suppose you sell a call option with Co =$0.03/ and X = $1.8/ , and sell a put option with P, =$0.02/ and X = $1.8/ at the same time. Both options are written in pounds and will expire in one year. In addition, suppose that contract sizes are 1m. (Hint: notice that you're selling, not buying, options) a) draw the profit profile of this portfolio one year later b) what is your profit (loss) when the pound exchange rate one year later is i) $1.9/; ii) $1.6/; iii) $1.8/
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