Explore BrainMass

Explore BrainMass

    Put Option on British Pounds

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is:
    a) $1,562.50
    b) -$1,562.50
    c) -$1,250.00
    d) -$625.00.

    © BrainMass Inc. brainmass.com March 4, 2021, 6:22 pm ad1c9bdddf

    Solution Summary

    The solution explains how to determine the profit from a put option with calculations and the answer.