8. If you believe that the Singapore dollar will depreciate against the USD in the coming 90 days, given the quotes below:

Put on Sing $ X= $0.6500/S$ premium= $0.0006/S$ In 120 days

Call on Sing $ X= $0.6500/S$ premium= $0.0064/S$ In 120 days

Contract size is S$1million.

1. What would you do to speculate? Be specific on buy or sell what, at what price etc.
2. What does your pay off graph look like? Mark the key points.
3. What is the break-even spot exchange rate between the S$ and the USD for your position?
4. Suppose 70 days after you opened your position, the spot exchange rate is $0.6438/S$, what would you do now? What is your gain/loss on each contract?
5. Suppose right before the contract expire, the spot exchange rate is $0.6438/S$, what would you do now? What is your gain/loss on each contract?
6. Suppose 70 days after you opened your position, the spot exchange rate is $0.6538/S$, what would you do now? What is your gain/loss on each contract?
7. Suppose right before the contract expire, the spot exchange rate is $0.6538/S$, what would you do now? What is your gain/loss on each contract?