1. Suppose a U.S. based company will receive 3 ,000,000 sometime during the next 3 months. The U.S. company is given the following forex cover by its banker

Call Options : X = $1.25/ Put Option: X = $1.35/

Option premium = $0.03/

1. What option should the exporter take?
2. What is the cost incurred today?
3. What is the breakeven price that the exporter has set on the price of the ?
4. If the spot rate at the end of 3 months is $1.55/?

i). Should the option exercised or let to expire?

ii). What is the actual cost for the above decision on the day of maturity?

2. A traveler SOLD A PUT OPTION on SG$ for a premium of $0.02 per unit. The Strike price X= $ 0.5706 and the price on the day of expiration S_T = 0.5600. There are 10,000 units in the options contract. What is the total net profit/loss for the traveler?