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5. You buy a put option on the £ for $.021/£. The option contract size is...

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Finance

5. You buy a put option on the £ for $.021/£. The optioncontract size is £500,000. The exercise price is $1.45/£. When theoption matures, the spot rate is $1.4055/£. What is your overallprofit/loss on the put option?

Answer & Explanation Solved by verified expert
3.6 Ratings (464 Votes)
Solution As per the information given in the question we have Exercise Price of the Put option 145 Spot price on Expiry 14055 Since the Exercise Price is greater than the spot price    See Answer
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Transcribed Image Text

5. You buy a put option on the £ for $.021/£. The optioncontract size is £500,000. The exercise price is $1.45/£. When theoption matures, the spot rate is $1.4055/£. What is your overallprofit/loss on the put option?

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