Exhibit 22.1
Use the Information Below for the Following Problem(S)
$\begin{array}{|l|c|l|l|l|}
\hline \text { Option Type } & & \text { Currency } &{\text { Canadian dollar }} \
\hline \text { Contract Size } & & 50000 & {\text { Canadian dollars }} \
\hline \text { Expiry } & & \text { April } & & \
\hline & & & & \
\hline \text { Strike } & \text { Call } & \text { Put } & & \
\hline \$ 0.815 & \$ 0.0118 & & & \
\hline \$ 0.820 & & \$ 0.0068 & & \
\hline
\end{array}$
-Refer to Exhibit 22.1.If the spot rate at expiration is $0.85 and the put option was purchased,what is the dollar gain or loss?
A) $340 loss
B) $125 gain
C) $750 gain
D) $750 loss
E) $200 loss

Question

Exhibit 22.1
Use the Information Below for the Following Problem(S)
 $\begin{array}{|l|c|l|l|l|}
\hline \text { Option Type } & & \text { Currency } &{\text { Canadian dollar }} \
\hline \text { Contract Size } & & 50000 & {\text { Canadian dollars }} \
\hline \text { Expiry } & & \text { April } & & \
\hline & & & & \
\hline \text { Strike } & \text { Call } & \text { Put } & & \
\hline \$ 0.815 & \$ 0.0118 & & & \
\hline \$ 0.820 & & \$ 0.0068 & & \
\hline
\end{array}$
-Refer to Exhibit 22.1.If the spot rate at expiration is $0.85 and the put option was purchased,what is the dollar gain or loss?
A) $340 loss
B) $125 gain
C) $750 gain
D) $750 loss
E) $200 loss

Quizplus · Accepted Answer

The put option gives the holder the right to sell 50,000 Canadian dollars at the strike price of $0.820. If the spot rate at expiration is $0.85, the holder can sell the Canadian dollars for $0.85 and exercise the put option to sell them at $0.820, resulting in a gain of $0.03 per Canadian dollar, or a total gain of $0.03 * 50,000 = $1,500. However, the holder paid $0.0068 * 50,000 = $340 for the put option, so the net gain is $1,500 - $340 = $1,160.

Exhibit 22 -Refer to Exhibit 22