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# Paulo writes a put option on Japanese yen with a strike pric

Paulo writes a put option on Japanese yen with a strike price of \$0.008000/¥ (¥125.00/\$) at a premium of 0.0080 cents per yen and with an expiration date six month from now. The option is for ¥12,500,000. What is Paulo's profit or loss at maturity if the ending spot rates are ¥110/\$, ¥115/\$, ¥120/\$, ¥125/\$, ¥130/\$, ¥135/\$, and ¥140/\$?

a) b) c) d) e) f) g)
Assumptions Values Values Values Values Values Values Values
Notional principal (¥) 12,500,000 12,500,000 12,500,000 12,500,000 12,500,000 12,500,000 12,500,000
Maturity (days) 180 180 180 180 180 180 180
Strike price (US\$/¥) \$0.008000 \$0.008000 \$0.008000 \$0.008000 \$0.008000 \$0.008000 \$0.008000
Premium (US\$/¥) \$0.000080 \$0.000080 \$0.000080 \$0.000080 \$0.000080 \$0.000080 \$0.000080

Ending spot rate (¥/US\$) 110.00 115.00 120.00 125.00 130.00 135.00 140.00
in US\$/¥ \$0.009091 \$0.008696 \$0.008333 \$0.008000 \$0.007692 \$0.007407 \$0.007143

Gross profit on option
Less premium
Net profit (US\$/¥)

Net profit, total

#### Solution Summary

The solution provides detailed explanations and calculations for the problem.

\$2.19