Question 1-3. Assume the following options are currently available for British pounds ():

Call option premium on British pounds = $.04 per unit

Put option premium on British pounds = $.03 per unit

Call option strike price = $1.56

Put option strike price = $1.53

One option contract represents 31,250.

1. At a long strangle position, what is your profit (loss) when spot exchange rate changes to $1.40

1. -$0.04
2. +$0.14
3. +$0.10
4. +$0.06
5. -$0.06

2. What is the profit (loss) you earn from the Call option in the long strangle position, when spot exchange rate changes to $ 1.53

1. -$0.04
2. -$0.03
3. +$0.03
4. +$0.01
5. -$0.01

3. Determine the break-event point (s) for the long strangle

1. $1.53 and $1.56
2. $1.46 and $ 1.56
3. $1.46 and $ 1,63
4. $1.49 and $1.63
5. $1.48 and $ 1.63