A put option on Japanese yen is written with a strike price of ¥95.00/$.Which spot exchange rate will maximize your profit if you choose to exercise the option?
A) ¥85.00/$
B) ¥90.00/$
C) ¥100.00/$
D) ¥115.00/$

Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell at the strike price. The profit is maximized when the spot rate is lowest compared to the strike price. At ¥115.00/$, the yen is weakest, maximizing the profit from selling at the higher strike price of ¥95.00/$.

A Put Option on Japanese Yen Is Written with a Strike