A speculator is considering the purchase of five three-month Japanese yen call options with an exercise price
Question:
A speculator is considering the purchase of five three-month Japanese yen call options with an exercise price of $0.0096 per yen. Each option contract is for 1,000,000 yens. The option premium is $0.000135 per yen. The spot price is $0.009528 per yen and the 90-day forward rate is $0.009571 per yen. What will be the speculator's profit if the yen appreciates to $0.0100 per yen at option expiration?
A speculator is considering the purchase of five three-month Japanese yen call options with an exercise price of $0.0096 per yen. Each option contract is for 1,000,000 yens. The option premium is $0.000135 per yen. The spot price is $0.009528 per yen and the 90-day forward rate is $0.009571 per yen. What will be the speculator's loss if the yen appreciates to $0.009571 per yen?
International Financial Management
ISBN: 978-0078034657
6th Edition
Authors: Cheol S. Eun, Bruce G.Resnick