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Category > Business & Finance Posted 17 Jun 2017 My Price 11.00

Barry Egan is a currency speculator.

Barry Egan is a currency speculator. Barry believes that the Japanese yen will fluctuate widely against the U.S. dollar in the coming month. Currently, one-month call options on Japanese yen (?Y) are available with a strike price of $.0085 and a premium of $.0007 per unit. One-month put options on Japanese yen are available with a strike price of $.0084 and a premium of $.0005 per unit. One option contract on Japanese yen contains ?Y6.25 million. (See Appendix B in this chapter.)
a. Describe how Barry Egan could utilize these options to speculate on the movement of the Japanese yen.
b. Assume Barry decides to construct a long strangle in yen. What are the break-even points of this strangle?
c. What is Barry’s total profit or loss if the value of the yen in one month is $.0070?
d. What is Barry’s total profit or loss if the value of the yen in one month is $.0090?

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Status NEW Posted 17 Jun 2017 01:06 PM My Price 11.00

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