An investor is expecting that the euro either will sharply increase or sharply decrease against the Japanese Yen. The investor purchases 2 options

1) a currency put option on the euro with a strike price (exchange rate) of 127/. When the investor purchases the contract, the spot rate of the euro is equivalent to 128/. the premium is 1/

2) a currency call option on the euro with a strike price (exchange rate) of 127/. When the investor purchases the contract, the spot rate of the euro is equivalent to 128/. the premium is 1/

a) Assume the euro's spot price at the expiration date (market price) is 135/

The investor's profit = /

b) Assume the euro's spot price at the expiration date (market price) is 117/

The investor's profit = /

c) What is the maximum loss

Maximum loss = /

An investor is expecting that the euro either will sharply increase or sharply decrease against the Japanese Yen. The investor purchases 2 options 1) a currency put option on the euro with a strike price (exchange rate) of 127/C. When the investor purchases the contract, the spot rate of the euro is equivalent to 128/e the premium is 1/C 2) a currency call option on the euro with a strike price (exchange rate) of 127/ When the investor purchases the contract, the spot rate of the euro is equivalent to 128/C the premium is \1/C a) Assume the euro's spot price at the expiration date (market price) is 135/c The investor's profit b) Assume the euro's spot price at the expiration date (market price) is 117/c The investor's profit f What is the maximum loss Maximum loss= X/E