10. Calling all profits: assume a call option on euros is written with a strike price of $1.2500/€ at a premium of 3.80¢ per euro ($0.0380/€) and with an expiration date three months from now. The option is for €100,000.calculate your profit or less should you exercise before maturity at a time when the euro is traded spot at the following:
e. $ 1.30/€
A. Solve the problem by computing the profit per euro, stating whether the option would be exercised at each spot rate, and determining the payoff at each spot rate. Compute the breakeven spot rate for the call option.
B. Using the same data in problem 10, compute the profit per euro, state whether the option would be exercised at each spot rate, and determine the payoff at each spot rate for a put option. Compute the breakeven spot rate for the put option.
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