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A speculator is considering the purchase of Mexican Peso call options (contract size: Peso 500,000) with a strike price $0.06/Peso. The premium is...

A speculator is considering the purchase of Mexican Peso call options (contract size: Peso 500,000) with a strike price $0.06/Peso. The premium is $0.007/Peso. 

a. If the spot at expiration is $0.069/Peso, what is the speculator's profit?

b. If the spot at expiration is $0.054/Peso, what is the speculator's profit?

c. If the spot at expiration is $0.063/Peso, what is the speculator's profit?

Top Answer

In case of Call option a) Payoff =  Max(0,(Price at Expiration-Exercise Price ))* Contact Size Payoff =... View the full answer

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