Global Electronics wishes to hedge its $15 million in dollar receivables coming due in 60 days. In order to reduce its net cost of hedging to zero, however, GE sells a 60-day dollar call option for $15 million with a strike price of J$98/US$ and uses the premium of $314,000 to buy a 60-day $15 million put option at a strike price of J$90/US$.

Graph the payoff on GE's hedged position over the range J$80/US$- J$110/US$. What risk is GE subjecting itself to with this option hedge? (5 marks)

Your completed graph must be uploaded below. You can submit an image of your graph. Graphs can be hand-drawn.