Approximately five years ago, Western Australia Quality Furniture Pty Ltd (WAQ) began importing wood from Russia. WAQ purchases wood from Russian Siberia, some of which is imported to Australia and some of which is refinished - and subsequently sold - in Russia. The Russian supplier invoices these products in Russian rubles (RUB). The current exchange rate of the ruble is AUD 0.10.

Recently, WAQ purchased wood for 2 million rubles and must pay for the wood in three months.

WAQ is also currently in negotiations to sell refinished wood in Russia. If the negotiations are successful, WAQ will receive 4 million rubles in three months, for a net cash inflow of 2 million rubles.

1. Describe in no more than 75 words how WAQ could use a straddle to hedge its possible positions in rubles?