1. A call option has an exercise price of $1.50/€ and a premium of $.02/€. A put option has an exercise price of $1.50/€ and a premium of $.04/€. Individual option contracts are for €25,000.
Suppose you sell five puts and sell two calls.
- Your B/E point (in terms of ST) on the downside (that means the lower of the two B/E points) is $____/€.
- Your B/E point (in terms of ST) on the upside is $____/€.
Determine your TOTAL profit or loss at each possible spot rate below.
$1.375/€. My profit/loss is $______________
$1.425/€ My profit/loss is $______________
$1.50/€ My profit/loss is $______________
$1.55/€ My profit/loss is $______________
$1.61/€ My profit/loss is $______________
$1.675/€ My profit/loss is $______________