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 $.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)?
A)-$0.01.
B)$0.01.
C)-$0.04.
D)$0.04.
E)-$0.03.

Question

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The Answer of 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 $.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)?
A)-$0.01.
B)$0.01.
C)-$0.04.
D)$0.04.
E)-$0.03.

Carl Is an Option Writer