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Question 2: Apple buys an Australian Dollar Call option (contract size: AUD100,000) at the premium of USD0.07/AUD. The exercise price is USD0.78/AUD....

Question 2:  

Apple buys an Australian Dollar Call option (contract size: AUD100,000) at the premium of USD0.07/AUD. The exercise price is USD0.78/AUD.

a. If the spot at expiration is USD0.072/AUD, what is the Apple's profit?

b. If the spot at expiration is USD0.082/AUD, what is the Apple's profit?

c. If the spot at expiration is USD0.085/AUD, what is the Apple'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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