PLEASE SHOW ALL WORK AND ANSWER BLUE QUESTIONS

Assume Hans believes the rate will decrease in 3 months.

current spot rate: $0.5851/SFr

strike rate: $0.5850/SFr

Standard Contract Size: SFr62,500

Hans E[S₉₀] rate: $0.5500/SFr

Hans Premium rate: $0.0050/SFr

Actual Spot(90): S₉₀ ?

a) What does Hans want the relationship of the spot rate and strike price at maturity?

Spot ___strike

b) What are the positions on the important dates? (i.e., what does Hans do?)

Position on:

Day 1:

Day 90: If S₉₀= $0.5750/SFr, then Hans

PUT OPTION/HOLDER Profit formula:

Profit = Strike price (Spot rate + Premium)

=

=

In dollar terms:

c) What if the spot > strike on day 90?

d) Why uses this contract?

a) What does Hans want the relationship of the spot rate and strike price at maturity? Spot strike b) What are the positions on the important dates? (i.e., what does Hans do?) Position on: Day 1: Day 90: If S90=$0.5750/SFr, then Hans PUT OPTION/HOLDER rofit formula: Profit=Strikeprice(Spotrate+Premium)== In dollar terms: c) What if the spot > strike on day 90 ? d) Why uses this contract