A.

Apple buys an Australian Dollar Call option (contract size: AUD100,000) at the premium of USD0.07/AUD. The exercise price is USD0.78/AUD.

If the spot at expiration is USD0.72/AUD, what is the Apples profit?

$7,000 loss

$1,000 loss

$6,700 gain

$6,000 gain

B.

Costco buys a Euro put option (contract size: 125,000) at a premium of $0.13/. The exercise price is $1.18/:

If the spot at expiration is $1.27/, what is the Costcos profit?

$11,250 loss

$5,000 loss

$27,500 loss

$16,250 loss