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A speculator is considering the purchase of 2 30-day pound put options with a striking price of $1.42 per . The premium is $0.03 per
A speculator is considering the purchase of 2 30-day pound put options with a striking price of $1.42 per . The premium is $0.03 per pound. The standard size of each option contract is 10,000 pounds.
(a) Determine the future spot price at which the speculator will only break even.
(b) What would be the speculators profit or loss if the pound appreciates to $1.44 per ?
(Put option, diagram. What if spot price is higher than striking/exercise price?)
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