Consider a "C$ Dec 7000 put" selling on the Chicago Mercantile Exchange (CME) at a price of $0.0120/C$. Each CME C$ contract is worth C$125,000. What would be the profit on an investment in this option if the spot rate at expiration is $0.6760/C$?

Question

Quizplus · Accepted Answer

The profit is calculated as follows: The option allows selling C$ at 0.7000, but the market rate is 0.6760, so the intrinsic value is 0.7000 - 0.6760 = 0.0240/C$. The profit per contract is (0.0240 - 0.0120) * 125,000 = $1,500.

Consider a "C$ Dec 7000 Put" Selling on the Chicago