12. SELLING CURRENCY CALL OPTIONS Mike Suerth sold a call option on Canadian dollars for $0.01 per unit. The strike price was $0.76, and the spot rate at the time the option was exercised was $0.82. Assume Mike did not obtain Canadian dollars until the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Mike's net profit on the call option?
12. SELLING CURRENCY CALL OPTIONS Mike Suerth sold a call option on Canadian dollars for $0.01 per unit. The strike price was $0.76, and the spot rate at the time the option was exercised was $0.82. Assume Mike did not obtain Canadian dollars until the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Mike's net profit on the call option?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:12. SELLING CURRENCY CALL OPTIONS Mike Suerth sold a call option
on Canadian dollars for $0.01 per unit. The strike price was $0.76, and
the spot rate at the time the option was exercised was $0.82. Assume
Mike did not obtain Canadian dollars until the option was exercised.
Also assume that there are 50,000 units in a Canadian dollar option.
What was Mike's net profit on the call option?
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