Question
A speculator buys a Canadian dollar call option with a strike price of $0.81 and a premium of $0.06 per unit. Suppose there are 70,000
A speculator buys a Canadian dollar call option with a strike price of $0.81 and a premium of $0.06 per unit. Suppose there are 70,000 units in this option contract. If the spot exchange rate for the Canadian dollar is $0.85 at the time the option is exercised, what is the net profit per unit and per contract to the speculator? Answer Choice Group
a. There is no solution of the exercise.
b. The net profit for the speculator is -$0.02 per unit and for a contract of -$1,400
c. The net profit for the speculator is $0.02 per unit and for a contract of $1,400
d. cannot be determined from the information given.
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