Question
You hold 1 contract on a 132 September Put option on British pound. The premium of the contract is $120 per contract. The contract size
You hold 1 contract on a 132 September Put option on British pound. The premium of the contract is $120 per contract. The contract size is GBP 10,000. Suppose at expiration date, the spot rate is S(USD/GBP)=1.3105. Answer the following questions.
Put option strike price = 1.32 USD/GBP
The spot price at expiry = 1.3105 USD/GBP
1)What is the payoff of this contract at expiration?
2) What is the profit of this contract at expiration?
3) What is the rate of return of this contract if it is exercised at expiration?
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Financial Markets And Institutions
Authors: Jeff Madura
8th Edition
0324568215, 978-0324568219
