Find the analyst profit

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Reference no: EM132293032

An analyst at DEF hedge fund believes that the euro (which currently trades at $1.25) will appreciate relative to the dollar over the next 6 months. The analyst decides to use ten 6 month call options to speculate. Each contract has 50,000 euros attached. The call options have a strike price of $1.30 and a call premium of $.05. 

Find the analyst's profit/loss (in USD) if the spot price is $1.27 at expiration. 

A. 10,000

B. 25,000

C. -25,000

D. -10,000

Find the analyst's profit/loss (in terms of USD) if the spot rate is €.5/$ at expiration

A. -325,000

B. 325,000

C. -25,000

D. 25,000

Reference no: EM132293032

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