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Consider an American call option on New Zealand dollars (NZ$) with a strike price of $0.8100/NZ$ traded at a premium of $0.0192 per NZ$ and
Consider an American call option on New Zealand dollars (NZ$) with a strike price of $0.8100/NZ$ traded at a premium of $0.0192 per NZ$ and with an expiration date three months from now. The option is for NZ$100,000.
Suppose that you have bought such a call option.
a. Plot your profit or loss on a graph should you exercise before maturity at a time when the NZ$ is traded spot at between $0.7000/NZ$ and $0.9200/NZS.
b. Find the break-even exchange rate.
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