. Baradan Kuppusamy works as a currency speculator for Valdor Capital headquartered in Kuala Lumpur. His most recent speculative position is to profit from his expectation that the Thai baht will rise significantly against the Malaysian ringgit. The current spot rate is RM0.1382/THB. He must choose between the following 90-day options on the Malaysian ringgit.

Option Strike Price Premium

Put on Malaysian ringgit MYR0.1600/THB THB0.005

Call on Malaysian ringgit MYR0.1600/THB THB0.0025

a. Should Baradan buy a put on Malaysian Ringgit or a call on Malaysian Ringgit?

b. What is Baradans break-even price on the option purchase in part (a)?

c. Using your answer from part (a), what are Baradans gross profit and net profit (including premium) if the spot rate at the end of 90 days is RM0.2000/THB?