What is your net profit on the contracts

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Reference no: EM131278702

1. Citigroup sells a call option on euros (contract size is €500,000) at a premium of $0.04 per euro. If the exercise price is $0.91 and the spot price of the euro at date of expiration is $0.93, what is Citigroup's profit (loss) on the call option?

2. Suppose you buy three June PHLX euro call options with a 90 strike price at a price of 2.3 (¢/€).

a. What would be your total dollar cost for these calls, ignoring broker fees?

b. After holding these calls for 60 days, you sell them for 3.8 (¢/€). What is your net profit on the contracts, assuming that brokerage fees on both entry and exit were $5 per contract and that your opportunity cost was 8% per annum on the money tied up in the premium?

Reference no: EM131278702

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