Assume that Mr. Binda is a speculator who buys a 90-day British Pound call option with a strike price of $27.02. Assume one option contract specifies 10,000 units and the current spot price as of that date is $26.87. Mr. Binda pays a premium of $0.05 per unit for the call option and no other charge (such as brokerage fee). Just on the expiration date, the spot rate of a pound reaches $27.18.
a) Determine the profit or loss if the option is exercised,
b) Determine the value of the call option lithe option is exercised.
price after call option