Assume that Mr. Binda is a speculator who buys a 90-day British pound option with a strike price of $27.02. Assume one option contract specifies 10,000 units and the current spot price as of date is $26.87. Mr. Binda pays premium of $0.05 per unit for the call option and no other charge (such as brokerage fee). Just on expiration date, the spot rate of a pound reaches $27.18. Required a) Determine the profit or loss if the option is exercised b) Determine the value of the call option if the option is exercised
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- A speculator purchases a put option on British Pounds for 0.05$ per unit; the strike price is 1.50$. A pound option represents 31.250 units Assume that at the time of the purchase, the spot rate of the pound is 151$ and continually rises to 1.62$ by the expiration date. 1. Compute the highest net profit possible for the speculator based on the information above? 2. Compute the highest profit/loss for the seller of this put optionAn investor enters a three-year swap contracts bypaying fixed price and receive spot price of Applesstock at the end of each year. The spot price ofApple's stock is Ș515 now, and the risk-free rate is3%.a. Draw the synthetic forwards contracts tomimicking this swap contract.o. Compute the rational fixed price based onarbitrage-free principalMender Co. will be receiving 700,000 Australian dollars in 180 days. Currently, a 180-day call option with an exercise price of $.74and a premium of $.02 is available. Also, a 180-day put option with an exercise price of $.72 and a premium of $.02 is available. Mender plans to purchase options to hedge its receivables position. Assume that the spot rate in 180 days is $.73. (1) Should the company use call options or put options? Why? (2) Calculate the amount received from the currency option hedge (after considering the premium paid). (3) Would the company have received more without hedging?
- Suppose that you are a speculator that anticipates a depreciation of the Singapore dollar (S$). You purchase a put option contract on Singapore dollars. Each contract represents S$45,000, with a strike price of $0.77 and an option premium of $0.03 per unit. Suppose that the spot price of the Singapore dollar is $0.73 just before the expiration of the put option contract. At this time, you exercise the option, while also purchasing S$45,000 in the spot market at the current spot rate. Use the drop-down selections to fill in the following table from your (the buyer's) perspective to determine your net profit (on a per contract basis). (Note: Assume there are no brokerage fees.) Note: Assume there are no brokerage fees. Transaction Selling Price of S$ - Purchase Price of S$ - Premium Paid for Option = Net Profit Per Unit $0.77 -$0.73 -$0.03 Per Contract $34,650 $27,720 $31,185Suppose that you are a speculator that anticipates a depreciation of the Singapore dollar (S$). You purchase a put option contract on Singapore dollars. Each contract represents S$45,000, with a strike price of $0.77 and an option premium of $0.03 per unit. Suppose that the spot price of the Singapore dollar is $0.73 just before the expiration of the put option contract. At this time, you exercise the option, while also purchasing S$45,000 in the spot market at the current spot rate. Assume the seller, after you exercise the put option, immediately sells the S$45,000 on the spot market. Now consider this scenario from the perspective of the individual or firm that sold you the put option. Note: Assume there are no brokerage fees. Use the drop-down selections to fill Transaction Selling Price of S$ - Purchase Price of S$ + Premium Paid for Option = Net Profit the following table from the sellers perspective. Per Unit $0.73 -$0.77 $0.03 Per Contract $32,850 $26,280 $39,42023. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is: A) $1,562.50. B) -$1,562.50. C) -$1,250.00. D) -$625.00.
- A trader creates a SHORT STRADDLE for GBP/USD with a strike price of 1.3865. The call option premium on GBP is 0.019 USD. The put option premium is 0.024 USD. One option contract represents GBP 125,000. What is the net profit of the trader if GBP/USD = 1.3869 at expiry?The speculator buys one put option at a strike price of $70/barrel and expiry date October 2021 for a premium of $1.20/barrel. Consider the following expected payoff chart for buying a put option. What are the names of point A and B? What is the exact value of A? What is the exact value B?An investor enters a threeyear swap contracts by paying fixed price and receive spot price of Apple’s stock at the end of each year. The spot price of Apple’s stock is $515 now, and the risk-free rate is 3%. 1.Draw the synthetic forwards contracts to mimicking this swap contract. 2.Compute the rational fixed price based on arbitrage-free principal.
- A trader creates a LONG STRADDLE for GBP/USD with a strike price of 1.2457. The call option premium on GBP is 0.017 USD. The put option premium is 0.022 USD. One option contract represents GBP 125,000. What is the net profit of the trader if GBP/USD = 1.2427 at expiry?Do not use chatgpt .Suppose that you are a speculator that anticipates an appreciation of the Singapore dollar (S$). You purchase a call option contract on Singapore dollars. Each contract represents S$25,000, with a strike price of $0.86 and call option premium of $0.02 per unit. Suppose that the spot price of the Singapore dollar is $0.92 just before the expiration of the call option contract. At this time, you call the contract and immediately sell the Singapore dollars to a bank at the current spot price. Now consider this scenario from the perspective of the individual or firm that sold you the call option. Note: Assume there are no brokerage fees. Use the drop-down selections to fill in the following table from the sellers perspective. Transaction Selling Price of S$ - Purchase Price of S$ + Premium Paid for Option = Net Profit Per Unit $0.86 -$0.92 $0.02 Per Contract $21,500 $12,900 $27,950