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Apex corp. must pay its Japanese supplier 125million Yen in three months. It is Thinking of buying 20 yen call options (contract size is 6.25
Apex corp. must pay its Japanese supplier 125million Yen in three months. It is Thinking of buying 20 yen call options (contract size is 6.25 Million Yen) at a strike price of $0.0080 in order to protect against the risk of a rising Yen. The premium is $0.00015 per Yen. Alternatively, Apex could buy 10 three-months Yen Future contracts (contract size is 12.5 Million Yen) at a Future price of $0.00794. The current spot rate is $0.007823. Suppose that Apex's Treasurer believes that the most likely value for the Yen in 90 days is $0.00790. If Apex's expectations turned out to be true. Calculate what Apex would gain or lose on the option. Calculate what Apex would gain or lose on the Futures position. What is Apex's breakeven point on the option position
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