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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Currency Strangles The following information is currently available for Canadian dollar (C$) options (see Appendix B in this chapter):
■ Put option exercise price ¼ $.75.
■ Put option premium ¼ $.014 per unit.
■ Call option exercise price ¼ $.76.
■ Call option premium ¼ $.01 per unit.
■ One option contract represents C$50,000.
a. What is the maximum possible gain the purchaser of a strangle can achieve using these options?
b. What is the maximum possible loss the writer of a strangle can incur?
c. Locate the break-even point(s) of the strangle
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