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Net profit per unit to the buyer of the australian dollar

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Reference no: EM132613938

The following information is currently available for Australian Dollar (AUD) option expiring in 2 months:

Put Option Strike Price=$0.74

Put Option Premium=$0.02 per unit

Call Option Strike Price=$0.76

Call Option Premium=$0.01 per unit

Current Spot Rate=$0.75

Required

A. What is the net profit per unit to the buyer of the Australian Dollar Strangle if AUD appreciates by 12% in 2 months?

B. What is the net profit per unit to the buyer of the Australian Dollar Straddle if AUD depreciates by 12% in 2 months and the put option also has a strike price of $0.76?

Reference no: EM132613938

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