Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike.
Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike.
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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Mike sold a put option on British pounds for $.04 per unit. The exercise price was $1.70, and the spot rate at the time the pound option was exercised was $1.68. Assume there are 50,250 units in a British pound option. What was Mike’s per unit net profit on the option? What was Mike’s total net profit on the option? Calculate the break-even spot rate (at expiration) for Mike.
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