Hi,

I asked this question the other day & I don't believe all the answers given were correct. Hopefully someone else is willing to give this problem a try. I've already answered it myself, I just would like to see if I'm correct

You are expected to receive 5,000,000 Swiss Franc (CH F) from the importer 90% days later. You want to hedge against possible devaluation of CHF in the coming 90 days. The following table shows you about derivates (futures and options) available to you. Call Option Put Option Contract Size CHF CHF 62,500.00 CHF 62,500.00 125,000.00 .. Spot RatetS/SF) today _ ~: WreRatelS/SFltodav \" Strike Price (S/SF) _ 1; Premium 5 per SF 3. i1if you decide to use futures on CH F, which position (Long or Short) will you 'H 31%take on futures and how many contracts will you need to fully hedge? b. instead of using futures, you want to enjoy upside potential while protecting . in 'from downside risk. Should you buy a PUT option on CHF or 3 CALL option on \"if: using your answer from question b, what is your net proceed in dollar iilit (_icludi'tig premium] ifithe spot rate at the end of 90 days is $0.91/CHF? i3]. Using your answer from question b, what is your net proceed in dollar :liit' (iniludinpremium) if the spot rate at the end of 90 days is $0.97/CH F? - i! y