Assume the current spot Euro is $1.1/ and the six-month European put option has a striking price of $1.15/. Assume the option premium is $0.02/.

1. The seller of this option is holding a _______________ position.

2. If at the due date, the value of the Euro has risen to $1.2/, will the option be exercised or not? The net profit/loss of the buyer of the option will be _______.

3. If at the due date, the option is at the money, which of the following is not true:

The value of the Euro at the due date is $1.15/.

You will be indifferent with whether to exercise the option or not.

The option incurs a loss for the option seller at this price.

4. What is the net profit/loss of the seller/writer of the option when the value of Euro is $1.12/ at the maturity date?

5. What is the breakeven price of this put option?