An American investor believes that the dollar will depreciate and buys one call option on the euro at an exercise price of 110 cents per euro. The option premium is 1 cent per euro, or $625 per contract of 62,500 euros (Philadelphia):
a. For what range of exchange rates should the investor exercise the call option at expiration?
b. For what range of exchange rates will the investor realize a net profit, taking the original cost
into account?
c. If the investor had purchased a put with the same exercise price and premium, instead of a call, how would you answer the previous two questions?

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The Answer of An American investor believes that the dollar will depreciate and buys one call option on the euro at an exercise price of 110 cents per euro. The option premium is 1 cent per euro, or $625 per contract of 62,500 euros (Philadelphia):
a. For what range of exchange rates should the investor exercise the call option at expiration?
b. For what range of exchange rates will the investor realize a net profit, taking the original cost
into account?
c. If the investor had purchased a put with the same exercise price and premium, instead of a call, how would you answer the previous two questions?

An American Investor Believes That the Dollar Will Depreciate and Buys