Assume that Fred Noonan purchases a put option on British pounds $($with a strike price of $$1\mathrm{.}50)$ for $$\mathrm{.}05$ per unit. A pound option

represents $31,250$ units. Assume that at the time of the purchase, the spot rate of the pound is $$1\mathrm{.}51$ and continually rises

to $$1\mathrm{.}62$ by the expiration date. The highest net profit possible for the speculator based on the information above is:

Make sure you identify the Break Even Points! You may have to add columns to the table

Long Put only

Call premium

Call profit

Put premium

Put profit

Net profit

$31,250$ units

Long Strangle