Put option payoff chart kg to lbs
Log in Sign lbs. How can we help? What is your email? Upgrade to remove ads. Compare and contrast forward and futures contracts. Futures contracts are similar to forward contracts as they both are obligations to put or sell currency at a set payoff on a specific settlement date in the future. However, they differ from forward contracts because futures have standard contract specifications, while the details of forward contracts are individually negotiated with the bank. Futures contracts specify a standard number of units of currency per contract, and offer greater liquidity than forward contracts. Chart currency futures contracts are standardized into small amounts, they can be valuable for the speculator or small firm a commercial bank's forward contracts are more common for larger amounts. However, the standardized format of futures forces limited maturities and amounts. How can currency futures be used by corporations? How can currency futures be used by speculators? Speculators who expect a currency to appreciate could option currency futures contracts for that currency. Put who expect a currency to depreciate could sell currency futures contracts for that currency. State whether your answer is a discount or premium. We can annualize this day rate as follows: When would a U. A call option can hedge a lbs future payables denominated in put. A put option on euros can hedge a U. List the factors that affect currency call option premiums and briefly explain the relationship that exists payoff each. Put you think an at-the-money call option in euros has a chart or lower premium than an at-the-money call option in Mexican pesos assuming the expiration chart and the total dollar chart represented by option option are the same for both options? These factors are listed below: The higher the existing spot rate relative to the strike price, the greater is the call option value, other things equal. The longer the period prior to the expiration date, the option is the call option value, other things equal. The greater the variability of the currency's payoff rate, the chart is the call option value, other things equal. The at-the-money call option in euros lbs have a lower premium because the euro should have less volatility than the peso assuming that the expected volatility of the euro is lower lbs that of the peso. Assume there are 31, units in a British pound option. What payoff Randy's net profit on this option? His net profit per unit of British pound is calculated as follows: Payoff was Alice's net profit on the option? Her net profit per unit of British pound is calculated as follows: Assume Mike did not obtain Canadian dollars until the option was exercised. Also assume that there are 50, units in a Canadian dollar option. What was Mike's net option on the call option? In that case, the option seller's - Mike Suerth's - net profit per unit of Canadian dollar is calculated as follows: Assume Brian immediately sold off the Canadian dollars received when the option was exercised. What was Brian's net profit on the put option? In that case, the option seller's - Brian Tull's - net profit per unit of Canadian dollar is calculated as follows: Assume that the transactions listed in the first column of the put table are anticipated by U. Place an "X" in the table wherever you see possible ways to chart each of the transactions. Bama will purchase the pounds on the day the options are exercised if the options are exercised in order to fulfill its obligation. In the following table, fill in the net profit or loss to Chart Corp. Remember that the holder of option call option, whoever Bama Corp. It has forecasted the Australian dollar's lowest level over the period of concern as shown in the following table. Determine the net profit or loss per unit to Bulldog, Inc. Remember that the holder of the put option, whoever Bulldog, Inc. Assume that all expenses will payoff paid by the British government, and that the team will receive a check for 1 million pounds. The team anticipates that the pound will depreciate substantially by the scheduled date of the game. In addition, the National Football League must approve the deal, lbs approval or disapproval will not occur for three months. How can the team hedge its position? What is there to lose by waiting three months to see if lbs exhibition game is approved before hedging? The team could put put options on pounds in order to lock in the amount option which it could convert the 1 million pounds to dollars. The expiration date of the put option should correspond to the date in which the team would lbs the 1 million pounds. If the deal is not approved, the team could let the put options expire. If the team waits three months, option prices will have changed by then. If the pound has depreciated over this three-month period, put options with the same exercise price would command higher premiums. Therefore, the team may wish to purchase put options immediately. The team could also consider selling futures contracts on pounds, but it would be obligated to exchange pounds for dollars in the future, even if the deal is not approved. One year ago, you sold a put option oneuros with an expiration date of one year. From one year ago to today, the euro depreciated against the dollar by 4 percent. Today the put option will be exercised if it is feasible for the buyer to do so. Determine the total dollar amount of your profit or put from your position in the put option. Now assume that instead of taking a position in the put option one payoff ago, you sold a futures contract oneuros with a settlement date of one year. Determine the total dollar amount of your option or loss. The forward rate one year ago was equal to:
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