The 1-year continuously compounded interest rate is 6%. One-year option prices for copper are shown in the table below.

Suppose CDE mines copper, with fixed costs of $ 0.50/lb and variable cost of $ 0.40/lb.

If CDE buys a put option with a strike of $ 0.95:

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $ ?

If CDE buys a put option with a strike of $ 1.00:

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $ ?

If CDE buys a put option with a strike of $ 1.05:

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ ?

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $ ?

Strike | Call | Put |

0.95 | 0.0649 | 0.0178 |

0.975 | 0.05 | 0.0265 |

1 | 0.0376 | 0.0376 |

1.025 | 0.0274 | 0.0509 |

1.034 | 0.0243 | 0.0563 |

1.05 | 0.0194 | 0.0665 |

Suppose CDE mines copper, with fixed costs of $ 0.50/lb and variable cost of $ 0.40/lb.

If CDE buys a put option with a strike of $ 0.95:

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $

If CDE buys a put option with a strike of $ 1.00:

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $

If CDE buys a put option with a strike of $ 1.05:

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $

What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $

You can earn partial credit on this problem.