Carl is an option writer. in anticipation of a depreciation of the british pound from its current level of $1.50 to $1.45, he has written a call option with an exercise price of $1.51 and a premium of $0.02. if the spot rate at the option's maturity turns out to be $1.54, what is carl's profit or loss per unit (assuming the buyer of the option acts rationally)?

Please find the detailed answer as follows.

Explanation:

Premium received (cash inflow ) - $ .02

On maturity : Option is exercisable as spot rate is higher than exercise price

                 loss to carl = 1.51- 1.54 = $ .03

Net gain /(loss)= .02 - .03 = - .01 (loss)

answer; the above statement is (true);

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so, to answer your question 1.

hope this buddy!

- courtney