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This template helps students in calculating the call option profits for buyer and seller.
Students need to enter the required information in the input screen (green shaded cells).
Output is automatically updated as information in the input screen is changed.
Please change the spot rate in item 4a, in order to see its impact on the net profit.
Input Screen
Foreign currency in question
2. Option Premium per unit
3. Strike Price
4. Spot rate at the exercise time
4a. New spot rate at the exercise time
5. One unit in option equals
6. Brokerage fee per contract
7. Number of contracts bought
British Pounds
$0.02
$1.45
$1.46
$1.47
31,250.00
$0.00
1
Conclusion:
The higher the assumed spot rate at the time the call option was exercised, the higher would be the net profit. The
contingency graph shows this relationship as well, although there is a maximum loss equal to the premium paid.
OUTPUT SCREEN
Net profit to call option buyer
Selling price of
Purchasing price of
Option premium paid
Net profit
as per item 4
as per item 4a
Per Unit
Per Contract Total
Per Unit
$1.46
$45,625.00
$45,625.00
$1.47
($1.45) ($45,312.50) ($45,312.50)
($1.45)
($0.02)
($625.00)
($625.00)
($0.02)
($0.01)
($312.50)
($312.50)
$0.00
as per item 4
as per item 4a
Per Unit
Per Contract Total
Per Unit
$1.45
$45,312.50
$45,312.50
$1.45
($1.46) ($45,625.00) ($45,625.00)
($1.47)
$0.02
$625.00
$625.00
$0.02
$0.01
$312.50
$312.50
$0.00
$1.45
$0.02
0.04
0.02
0.00
0.00
1.06
1.14
1.22
1.30
1.38
-0.02
-0.04
-0.06
Future Spot Rate
1.46
1.46
1.54
1.62
$1.45
$0.02
0.04
0.02
0.00
0.00
1.06
1.14
1.22
1.30
1.38
-0.02
-0.04
-0.06
Future Spot Rate
1.46
1.46
1.54
1.62
British Pounds
$0.04
$1.80
$1.85
$1.86
31,250.00
$0.00
1
Conclusion:
The higher the assumed spot rate at the time the put option was exercised, the lower would be the net profit. The
contingency graph shows this relationship as well, although there is a maximum loss equal to the premium paid.
OUTPUT SCREEN
Net profit to put option buyer
Selling price of
Purchasing price of
Option premium paid
Net profit
as per item 4
as per item 4a
Per Unit
Per Contract Total
Per Unit
$1.80
$56,250.00
$56,250.00
$1.80
($1.85) ($57,812.50) ($57,812.50)
($1.86)
($0.04)
($1,250.00)
($1,250.00)
($0.04)
($0.09)
($2,812.50)
($2,812.50)
($0.10)
as per item 4
as per item 4a
Per Unit
Per Contract Total
Per Unit
$1.85
$57,812.50
$57,812.50
$1.86
($1.80) ($56,250.00) ($56,250.00)
($1.80)
$0.04
$1,250.00
$1,250.00
$0.04
$0.09
$2,812.50
$2,812.50
$0.10
$1.80
$0.04
1.90
1.70
1.50
1.30
1.10
0.90
0.70
0.50
0.30
0.10
-0.10
0.08 0.24 0.40 0.56 0.72 0.88 1.04 1.20 1.36 1.52 1.68
0.20
0.16
0.12
0.08
0.04
0.00
1.56
1.60
1.64
1.68
1.72
1.76
$1.80
$0.04
0.00
-0.20
-0.40
-0.60
-0.80
-1.00
-1.20
-1.40
-1.60
-1.80
-2.00
0.08 0.24 0.40 0.56 0.72 0.88 1.04 1.20 1.36 1.52 1.68
0.20
0.16
0.12
0.08
0.04
0.00
-1.56
-1.60
-1.64
-1.68
-1.72
-1.76