Question
Reska, Inc., has constructed a long euro straddle. A call option on euros with an exercise price of $1.10 has a premium of $.025 per
Reska, Inc., has constructed a long euro straddle. A call option on euros with an exercise price of $1.10 has a premium of $.025 per unit. A euro put option has a premium of $.017 per unit. How do you calculate these answers for calls and puts?
Value of Euro at Option Expiration
| $.90 | $1.05 | $1.50 | |
| Call | -$.25 | -$.025 | +$3.75 |
| Put | +$1.83 | +$0.33 | -$.017 |
| Net | +$.158 | +$0.08 | +$.358 |
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Essential Mathematics For Economic Analysis
Authors: Knut Sydsaeter, Peter Hammond
3rd Edition
0273713248, 9780273713241
