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A European put option contract with an exercise price of $ 1 . 5 0 per pound and a contract size of 3 1 ,
A European put option contract with an exercise price of $ per pound and a contract size of is currently trading at a premium of $ per pound.
Required:
a If you buy this contract, what spot exchange rate at maturity will maximize your profit?
a If you buy this contract, what is the amount of the maximum possible profit from one contract?
b If you buy this contract, what is your maximum possible loss from one contract?
c If you sell this contract, what is your maximum possible profit on this contract?
d If you sell this contract, what is your maximum possible loss from one contract?
d At what future spot exchange rate will you maximize your loss?
e At what future spot exchange rate, will either the buyer or seller of this contract break even?B
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