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$40,000, with a strike price of $0.68 and an option premium of $0.02 per unit. Suppose that the spot price of the Singapore dollar is $0.62 just before the expiration of the put option contract. At this time, you exercise the optior while also purchasing S$40,000 in the spot market at the current spot rate. se the drop-down selections to fill in the following table from your (the buyer's) perspective to determine your net profit (on a per contract asis). (Note: Assume there are no brokerage fees.) ote: Assume there are no brokerage fees. Transaction Selling Price of S$ - Purchase Price of S$ - Premium Paid for Option = Net Profit Per Unit $0.68 -$0.62 -$0.02 Per Contract
Suppose that you are a speculator that anticipates a depreciation of the Singapore dollar (S$). You purchase a put option contract on Singapore dollars. Each contract represents S$40,000, with a strike price of $0.68 and an option premium of $0.02 per unit. Suppose that the spot price of the Singapore dollar is $0.62 just before the expiration of the put option contract. At this time, you exercise the optior while also purchasing S$40,000 in the spot market at the current spot rate. se the drop-down selections to fill in the following table from your (the buyer's) perspective to determine your net profit (on a per contract asis). (Note: Assume there are no brokerage fees.) ote: Assume there are no brokerage fees. Transaction Selling Price of S$ - Purchase Price of S$ - Premium Paid for Option = Net Profit Per Unit $0.68 -$0.62 -$0.02 Per Contract
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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