question archive You bought 475,000 put options with a strike of $0
You bought 475,000 put options with a strike of $0
Subject:BusinessPrice:2.87 Bought7
You bought 475,000 put options with a strike of $0.0550 / P for $0.0005. The current spot exchange rate is $0.0545 / P. Immediate exercise of these options will generate a profit/loss of?
-451.25
0.00
None of the alternatives
Negative profit, so exercise would not occur,
-475.00
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Ans.
Loss due to selling now.
Fees/Price paid for Put options = .0005*475,000 = 237.5 (Loss)
Change in Spot Rate = .0550-.0545 = .0005
Loss due to change in spot price = .0005*475,000
= 237.5 (Loss)
Total Loss = 237.5 + 237.5 = $475 Answer
Answer is -$475
