A trader replicates a long forward position using put and call options. The options' strike is 0.9000 (USD/AUD) and both their premiums are USD0.02.
Calculate the net payoff of the position if the spot exchange rate at expiry is 0.9300.
A) USD0.06
B) USD0.04
C) USD0.03
D) USD0.02

Question

A trader replicates a long forward position using put and call options. The options' strike is 0.9000 (USD/AUD) and both their premiums are USD0.02.
 Calculate the net payoff of the position if the spot exchange rate at expiry is 0.9300.
A) USD0.06
B) USD0.04
C) USD0.03
D) USD0.02

Quizplus · Accepted Answer

The Answer of A trader replicates a long forward position using put and call options. The options' strike is 0.9000 (USD/AUD) and both their premiums are USD0.02.
 Calculate the net payoff of the position if the spot exchange rate at expiry is 0.9300.
A) USD0.06
B) USD0.04
C) USD0.03
D) USD0.02

A Trader Replicates a Long Forward Position Using Put and Call