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You bought a Dec. 22 put option on euro with a strike price (K) of $1.1850/ in June 22 and paid a premium of $0.015/.
You bought a Dec. 22 put option on euro with a strike price (K) of $1.1850/ in June 22 and paid a premium of $0.015/. The current spot exchange (S) rate for euro is $1.1750/. Contract size = 125,000(i) What is the profit/loss if the option is exercised at expiration if the spot rate settles at$1.1650/? (ii) if the spot rate settles at $1.1950? The U.S. interest rate is 2%
The answer is supposed to be 606.25 and -1893.75 but I am not getting it
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