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Calculate the net profit-loss possible for the speculator

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Assume that a speculator purchases a put option on Euro (with a strike price of $1.10) for $0.05 per unit. A Euro option represents 31,250 units. Assume that at the time of the purchase, the spot rate of Euro is $1.11 and continually rises to $1.20 by the expiration date. Should the speculator exercise the option? Calculate the net profit/loss possible for the speculator.

Reference no: EM132494362

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