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MacBont ou are considering a call option on a pound. The contract size is 31,250 pounds. The option premium is $0.25/pound. The exercise price is
MacBont ou are considering a call option on a pound. The contract size is 31,250 pounds. The option premium is $0.25/pound. The exercise price is $1.50/pound. (35 points) a. Draw the option profit profile with all the appropriate labels and amounts total option premium; strike price; break-even price. Be sure to label the axes. (7.5 points) b. What is the maximum you lose/gain if the option is out-of-money? (5 points) MacBont ou are considering a call option on a pound. The contract size is 31,250 pounds. The option premium is $0.25/pound. The exercise price is $1.50/pound. (35 points) a. Draw the option profit profile with all the appropriate labels and amounts total option premium; strike price; break-even price. Be sure to label the axes. (7.5 points) b. What is the maximum you lose/gain if the option is out-of-money? (5 points)
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