At what exchange rate do you start to lose money

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Reference no: EM131995932

From the perspective of the writer of a put option written on €62,500. If the exercise price is $1.55/€, and the option premium is $0.03.

a. At what exchange rate do you start to lose money?

b. What is your maximum profit?

c. What is your maximum loss?

d. If the spot exchange rate is $1.54/€ calculate the intrinsic value and the time value of the put option.

e. Draw the profit graph for the writer of this put option

Reference no: EM131995932

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