Kiko Peleh's Puts: Calculating Profit or Loss at Maturity

What is Kiko's profit or loss at maturity for each ending spot rate?

Kiko Peleh writes a put option on Japanese yen with a strike price of $0.008000/¥ (¥125.00/$) at a premium of 0.0080¢ per yen and with an expiration date six months from now. The option size is X12,500,000. Given the ending spot rates of ¥111/$, ¥114/$, ¥120/$, X125/$, ¥129/$, ¥135/$, and ¥141/$, how much profit or loss will Kiko incur at maturity for each rate?

Kiko's Profit or Loss at Maturity for Each Ending Spot Rate:

Kiko's profit or loss at maturity if the ending spot rate is ¥111/$ is -$32,000.

Kiko's profit or loss at maturity if the ending spot rate is ¥114/$ is -$2,500.

Kiko's profit or loss at maturity if the ending spot rate is ¥120/$ is $0.

Kiko's profit or loss at maturity if the ending spot rate is ¥125/$ is $12,500.

Kiko's profit or loss at maturity if the ending spot rate is ¥129/$ is $35,000.

Kiko's profit or loss at maturity if the ending spot rate is ¥135/$ is $70,000.

Kiko's profit or loss at maturity if the ending spot rate is ¥141/$ is $110,000.

To calculate Kiko's profit or loss at maturity, we need to consider the ending spot rates in relation to the strike price of $0.008000/¥. If the ending spot rate is lower than the strike price, Kiko will incur a loss. If the ending spot rate is higher than the strike price, Kiko will make a profit.

For example, if the ending spot rate is ¥111/$, the difference between the strike price and the ending spot rate is $0.008000/¥ - ¥111/$ = -$0.003000/¥. Since Kiko has written a put option, the profit or loss is calculated by multiplying the difference by the option size, which is X12,500,000. Therefore, Kiko's profit or loss at maturity would be -$0.003000/¥ * X12,500,000 = -$32,000.

Similarly, we can calculate the profit or loss for each ending spot rate using the same formula. As the ending spot rate increases above the strike price, Kiko's profit also increases, and vice versa.

By analyzing the different ending spot rates, we can see how Kiko's profit or loss varies depending on the market conditions and the movement of the Japanese yen against the U.S. dollar.