ACenture Corporation incorporated in 2000 and it is an investment company that manage its client wealth in various of investment instruments. Chun, 27 years is one of the Fund Manager in the company. Currently, he has 200 billion of his clients portfolio to manage. VVSawit is one of his clients and has produce cooking oil for local and export especially to Europe, China and US. Now, the exchange rate Malaysia Ringgit to US is very low at US0.21 or RM4.68212. VVSawit request Chun to spread 1000 tonnes between Quarter 4 in 2022 and Quarter 1in 2023.

As at 17^th October, 2022, the CPO futures price as follows:

Spot month : RM1300

One-month : RM1330

Two-months : RM1340

Three-months : RM1360

Four-months : RM1390

Five-months : RM1420

Assume in 4th Quarter of 2022, the CPO futures price as follows:

December 2022: RM1320

January 2023 : RM1360

February 2023 : RM1410

March 2023 : RM1460

April 2023 : RM1490

Required:

Brief either Chun will agree with his client to spread and how he can make money from spreading based from the above situation?

Assess either his client is profit from the above strategy if the commission is RM100 per-round.

To protect from exchange rate risk exposure, what type of spreading Chun may suggest to VVSawit? Explain with example.

Suggest to Chun if he is possible to trade in Option market by using spreading strategy. Discuss how spreading strategy (any one of the strategy) may also protect from risk arising?