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What is Mary’s Call and Put Option Analysis about?
Mary buys a call option on the Australian dollar with a strike price of $0.91 and premium of $0.03 per A$. She should exercise the option if the ending spot rate is greater than the strike price plus premium. In 3 sentences: If the ending spot rate is less than $0.94 per A$, Mary should not exercise the option and will lose the premium payment. At a rate of $0.94, Mary would break even. If the rate is above $0.94, Mary should exercise the option and will realize a net profit.
- Author
- Nguyễn Lâm
- Language
- EN