What is barrys total profit or loss

Assignment Help Financial Management

Reference no: EM13936128

Speculating with currency options. Barry Egan is a currency speculator. Barry believes that the Japanese yen will fluctuate widely against the euro in the coming month. Currently, one-month call options on Japanese yen (¥) are available with a strike price of 0.0085 euro and a premium of 0.0007 euro per unit. One-month put options on Japanese yen are available with a strike price of 0.0084 euro and a premium of 0.0005 euro per unit. One option contract on Japanese yen con- tains ¥6.25 million. (See Appendix 5B in this chapter.)

a. Describe how Barry Egan could utilize these options to speculate on the movement of the Japanese yen.

b. Assume Barry decides to construct a long strangle in yen. What are the breakeven points of this strangle?

c. What is Barry's total profit or loss if the value of the yen in one month is 0.0070 euro?

d. What is Barry's total profit or loss if the value of the yen in one month is $0.0090 euro?

Reference no: EM13936128

Questions Cloud

Integrated marketing communication issues : A brief discussion of the Integrated Marketing Communication issues which impact on competitiveness. These issues should be discussed from an implementation point of view.

How listening skills impact and are critical to a client : In addition to your interview, use your textbook, the Argosy University online library resources, and the Internet to conduct research on how listening skills impact and are critical to a client-patient relationship

Constitutes an issue of human dignity : You will first need to explain why this case constitutes an issue of human dignity. You will then need to discuss one perspective that is presented in the case study and analyze this in terms of the understanding of human dignity that underpins the p..

Sustainability in marketing : It is highly desirable to students of Strategic Marketing Management class to learn about Sustainability in Marketing. This assignment is designed for students learn the topic through library research.

What is barrys total profit or loss : What is Barry's total profit or loss if the value of the yen in one month is 0.0070 euro? What is Barry's total profit or loss if the value of the yen in one month is $0.0090 euro?

Compute the cost of the market basket for each year : Assume that the market basket is defined as 1 hammer, 1 lawn mower, 1 unit of groceries for the year, and 2 bicycles. a. Compute the cost of the market basket for each year. Calculate the CPI four times. Use 2005 as the base year the first time, then..

Explain consumer guarantees under the competition : Describe who is and who is not a consumer under the Competition and Consumer Act 2010 - Explain four consumer guarantees under the Competition and Consumer Act 2010

Developing software for smile recognition : DEVELOPING THE SOFTWARE FOR SMILE RECOGNITION AND NOT FACE DETECTION - It should also cover other substantial development work such as requirements, analysis and design, and implementation or other documentation as agreed with your supervisor

Australian stock exchange : You may choose any company that is listed on the Australian Stock Exchange (ASX) - You must must choose a company from the ASX only though.

User Account

All Pages