9. Consider the following prices for coffee options which were taken from WSJ. Theunits are dollars per pound of coffee.Strike July Calls July Puts1.60 0.1125 0.16351.65 0.1000 0.20001.70 0.0900 0.24101.75 0.0760 0.2770The futures price for July delivery is $1.549/lb. Ignore the time value of the money.Suppose I am a coffee producer (i.e. I sell coffee ). Assume my break-even pricefor coffee is $1.55/lb.(a) If I want to lock in a selling price for coffee, what futures position should Itake? What profit have I locked in?3(b) I would like to protect myself against drops in the July price of coffee but stillbenefit if the July price of coffee rises. What option position should I take ifI want a $1.65/lb floori.e., the option provides a hedge against price dropsto $1.65 or loweron my selling price? What is the lowest all-in price (i.e.the net cost or revenue from the option plus the revenue from the coffee) thatI will receive for the coffee? Draw the profit diagram with and without thefloor. At what July spot price for coffee does the hedged position start to dobetter than the unhedged position?(c) How would I get a collar with a $1.60 floor and a $1.70 capi.e., my profit iscapped when the price of coffee is $1.70 or higher? Draw the profit diagramfor the collar. At what July spot pricefor coffee does the collar start to dobetter than the unhedged position?