Let's consider how a US importer buying $1$ million Euros of computers for

a July payment might hedge against Foreign Exchange Risk using a currency

call option. The current spot rate is $$1\mathrm{.}2$ per Euro. To hedge against an

anticipated change in the exchange rate between now and July in $2023,$ the

importer purchases July euro call options.

An Exercise exchange rate is $1\mathrm{.}3$ and the premium is $$0\mathrm{.}01$ per Euro. One

contract amount of $62,500$ euros. Thus the number of contract is $20.$ Now if

in July the dollar depreciates to an exchange rate $1\mathrm{.}5$ dollar per euro, then calculate the net option profit or loss due to buying call option contract.