An investor who is dealing in rice has 100 bushels of rice in his store. The current Price of rice is Rs.500 per bushel. He fears the price of rice may fall substantially during the next 3 months. He is thinking of using options to hedge his position. A 3-months option on rice for 100 bushels is available with a contract price (Premium) of Rs.150 per bushel and a strike price of Rs. 400 per bushel,

i. Which option type and position is suitable for him and why? ii. Show with the help of calculation, the net gain or loss (taking into account the premium) of the investor if he exercises the option when the price of rice at maturity is 400 per bushel? iii. Show with the help of calculation, the net gain or loss (taking into account the premium) of the investor if he exercises the option when the price of rice at maturity is 340 per bushel