Spears Co. will receive SF1,000,000 in 30 days. Use the following information to determine the total dollar amount received (after accounting for the option premium) if the firm purchases and exercises a put option:
Exercise price = $.63
Premium = $.02
Spot rate = $.60
Expected spot rate in 30 days =$.56
30 day forward rate = $.62
Total Option premium= Option premium per SF*Total number of options ...
This solution calculates the total dollar amount received with a given put option.