Assume that a speculator longs a call option on British pounds $($with a strike price of $$1\mathrm{.}32)$ for $$\mathrm{.}05$ per unit. A pound option represents $10,000$ units. Assume that at the time of the purchase, the spot rate of the pound is $$1\mathrm{.}33$ and continually rises to $$1\mathrm{.}40$ by the expiration date.

a$-$ Show the net profit possible for the speculator based on the following expected Spot rates for the British Pound $$1\mathrm{.}33,$$$1\mathrm{.}35,$ $$1,36,$$$1\mathrm{.}38,$$$1\mathrm{.}40$

b$-$ Which market is primarily used by speculators, the forward market or the future market. Explain your answer highlighting the main differences between the forward and future contracts.

c$-$ If the speculator is expecting a currency appreciation which option should he long and which option should he short?

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