Chapter07

# Chapter07 - A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18...

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Exhibit 7.4 Buying a Call Option on Swiss Francs Cost of the Call Option \$0.005 Exercise Price \$0.585 Spot price of Swiss Franc (US\$) \$0.570 \$0.580 \$0.585 \$0.590 \$0.600 \$0.610 Buyer's Payoff for Call Option (U.S. cents/Swiss Franc) (0.500) (0.500) (0.500) 0.000 1.000 2.000 Key Cell Entries B5: =IF(B4>\$B\$3,B4-\$B\$3-\$B\$2,-\$B\$2)*100, copy to C5:G5 \$0.570 \$0.575 \$0.580 \$0.585 \$0.590 \$0.595 \$0.600 \$0.605 \$0.610 (1.00) (0.50) 0.00 0.50 1.00 1.50 2.00 Spot Price (U.S. Cents per Swiss Franc) Profit (U.S. Cents per Swiss Franc) Area of Limited Loss Area of Unlimited Profit Strike price "At the money" Break-even price "Out of the money" "In the money" A B C D E F G H 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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Exhibit 7.5 Selling a Call Option on Swiss Francs Cost of the Call Option \$0.005 Exercise Price \$0.585 Spot price of Swiss Franc (US\$) \$0.570 \$0.580 \$0.585 \$0.590 \$0.600 \$0.610 Seller's Payoff for Call Option (U.S. cents/Swiss Franc) 0.500 0.500 0.500 0.000 (1.000) (2.000) Key Cell Entries
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Chapter07 - A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18...

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