You write a call option with a strike of $1.473/£ and a premium of $0.72. The current spot exchange rate is $1.434/£. What is the option's intrinsic value?
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You write a call option with a strike of $1.473/£ and a premium of $0.72. The current spot exchange rate is $1.434/£. What is the option's intrinsic value?
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- A put option has a strike (exercise) price of $0.82. If the spot exchange rate is $0.79, the put option would be ________. A. out of the money B. in the money C. at the money D. at a discount2. These options are traded in the market: call option with an Exercise (Strike) Price of 1.15 $/€ and premium (option cost) of 0.03 $ per euro. (a) If the Spot exchange rate is 1.17 $/ €, is the option ITM, ATM or OTM? (b) Calculate Intrinsec value and Time value of the option. (c) If put options are traded with same Exercise Price at same cost of 0.03 $ per euro and Fwd for the same maturity is traded at 1.17 $/ €, how can an astute tradem arbitrage? Explain. (d) Calculate Intrinsec value and Time value of the put option mentioned above.Suppose the exchange rate of euro at current spot market is $1.25/€. If a put option has a strike price of $1.18/€ then we can say this option is a) inthemoney b) outofthemoney c) atthemoney d) past breakeven
- Suppose you took a long position on a put option with an exercise price of $1.95 per pound and paid a premium $0.20 per pound. Required: a. If the spot exchange rate turns out to be $2.10 per pound on the maturity date, is the put option in-, at-, or out-of-the-money? b. If the spot exchange rate turns out to be $2.10 per pound on the maturity date, will you exercise this option? c. If the spot rate at maturity turns out to be $1.90 per pound, is the contract in-, at-, or out-of-the-money? d. If the spot rate at maturity turns out to be $1.90 per pound, will you exercise this option? The option is Will you exercise this option? Spot Rate $2.10 Spot Rate $1.902. Suppose the exchange rate of euro at current spot market is $1.25/€. If a call option has a strike price of $1.28/€ then we can say this option is a) inthemoney b) outofthemoney c) atthemoney d) past breakeven 3. Suppose the exchange rate of euro at current spot market is $1.25/€. If a put option has a strike price of $1.18/€ then we can say this option is a) inthemoney b) outofthemoney c) atthemoney d) past breakeven 4. According to our class discussion, suppose a U.S. based real estate developer is participating in a bid competition for a land in London. What of the followings can provide the best protection when Pound is expected to appreciate a) Call options b) buy futures c) sell forwards d) buy forwards 5. Which of following activities dominates foreign exchange transactions a) multinational corporations buying and selling foreign exchange b) importers and exporters buying and selling foreign exchange c) banks buying and selling foreign exchange d)…Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option?
- A put option has a strike price of MYR3.00/SGD. If the option is exercised before maturity, what price in the followings would maximize gain? a. MYR3.00/SGD. b. MYR2.90/SGD. c. MYR3.05/SGD. d. MYR2.95/SGD.From the perspective of the writer (seller) of a put option written on£31.250. If the strike price is $1.60/f, and the option premium is$1,250, at what exchange rate do you break even?O $1.64/£O $1.54/£O $1.60/€O $1.56/A call option has a strike price of MYR3.00/SGD. If the option is exercised before maturity, what price in the followings would maximize gain? a. MYR3.00/SGD. b. MYR2.90/SGD. c. MYR3.05/SGD. d. MYR2.95/SGD.
- Consider the following data (interest rate is per period): S = 100; K = 75;R = 1.20 ; u = 1.5 ; d = .5. 1. What is the binomial price of a European call option with two periods until expiration? What is the price an American option with the same strike price and same time to expiration. Is there ever early exercise? 2. Show that the binomial option price for a European put option with two periods to go until expiration is 3.125. Show that the binomial price for an American put is 6.25. Can you conclude from the difference in prices alone that early exercise may be optimal? When is it optimal? 3. Use your answers to (i) and (ii) to verify that put-call parity holds for European options, but not for American options. Explain all answers in detail or step by step solution.Assume that K=61, St =65, t = 0.25 (i.e. time to expiry is 3 months), and the risk-free rate is 0.04. The current price of the put option is p = 4. What would the price of the call option ‘c’ need to be for put-call parity to hold?find a formula for the price of European call option. if R=0 and S=(0)=X=1. Compute the price for U=0.01 and D=-0.19