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Question

1.   You want to construct a euro straddle. A call option on euros with an exercise price of 1.10 USD has a

premium of 0.025 USD per unit. A euro put option has a premium of 0.017 USD per unit for the same exercise price.  


If you construct a long euro straddle, what is your net profit per unit if the future spot rate is

1) 0.90 USD?

2) 1.05 USD?

3) 1.50 USD?

4) 2.00 USD?

Top Answer

euro call option x = 1.10 premium = 0.025 euro put option x = 1.10 premium = 0.017 Total premium paid =0.025+0.017 =0.042... View the full answer

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