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You trade in two types of options.  First, you purchase 7 call option contracts on the Euro with an exercise price of 1.25.  Second, you sell 8 put option contracts on the Euro with an exercise price of 1.22.  The fees/prices on the contracts are $.04 (calls) and $.03 (puts).  Forward Rates for the Euro are 1.210-11 $/E.  If contract sizes for Euros are 125,000 options per contract and the final price of Euros is 1.40. $/E, how much profit/loss have you made from participation in options

You trade in two types of options.  First, you purchase 7 call option contracts on the Euro with an exercise price of 1.25.  Second, you sell 8 put option contracts on the Euro with an exercise price of 1.22.  The fees/prices on the contracts are $.04 (calls) and $.03 (puts).  Forward Rates for the Euro are 1.210-11 $/E.  If contract sizes for Euros are 125,000 options per contract and the final price of Euros is 1.40. $/E, how much profit/loss have you made from participation in options

Essentials Of Investments
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
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You trade in two types of options.  First, you purchase 7 call option contracts on the Euro with an exercise price of 1.25.  Second, you sell 8 put option contracts on the Euro with an exercise price of 1.22.  The fees/prices on the contracts are $.04 (calls) and $.03 (puts).  Forward Rates for the Euro are 1.210-11 $/E.  If contract sizes for Euros are 125,000 options per contract and the final price of Euros is 1.40. $/E, how much profit/loss have you made from participation in options?

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