Response to the following problem:
You often take speculative positions in options on euros. One month ago, the spot rate of the euro was $1.49, and the 1-month forward rate was $1.50. At that time, you sold call options on euros at the money. The premium on that option was $.02. Today is when the option will be exercised if it is feasible to do so.
a. Determine your profit or loss per unit on your option position if the spot rate of the euro is $1.55 today.
b. Repeat question a, but assume that the spot rate of the euro today is $1.48.