A put option to sell $18,000 at a strike price of $1.80 = £1.00 is equivalent to

Question

Quizplus · Accepted Answer

A put option to sell $18,000 at a strike price of $1.80 = £1.00 means that the option holder has the right to sell $18,000 and receive £10,000 if the exchange rate is at or below $1.80 = £1.00. This is equivalent to a call option to buy £10,000 at a strike price of $1.80 = £1.00, as the option holder would have the right to buy £10,000 and spend $18,000 if the exchange rate is at or below $1.80 = £1.00. Therefore, the correct choice is A.

A Put Option to Sell $18,000 at a Strike Price