Assume That a British Pound Put Option Has a Premium

Assume that a British pound put option has a premium of $.03 per unit and an exercise price of $1.60. The present spot rate is $1.61. The expected future spot rate on the expiration date is $1.52. The option will be exercised on this date, if at all. What is the expected per unit net gain (or loss) resulting from purchasing the put option? ​

A) $.01 loss
B) $.09 loss
C) $.09 gain
D) $.05 gain

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free