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, and 4) 2.00 USD
o What is the break-even points of the long straddle? Would this change if it was a short straddle?
Net profit per unit if future spot rate is: 1)When spot rate is 0.90 USD then there is profit of... View the full answer