Today, U.S. dollar option prices (C$cents per U.S. dollar, US$100,000 per contract)

Option & Underlying	Strike Price	Calls Last			Puts Last
		June	September	December	June	September	December
1.2736	1.00	2.02	3.36	4.40	0.39	1.51	2.35
1.2736	1.10	0.89	2.34	3.40	1.26	2.50	3.35
1.2736	1.20	0.36	1.65	2.65	2.74	3.80	4.65
1.2736	1.30	0.15	1.03	1.85	5.51	6.18	6.90

You speculate that in December the Canadian dollar will rise sharply against the U.S. dollar.

Answer:

(1) What should you do to act on your speculation, that is, should you buy a put or a call on U.S. dollar?

(2) For a strike price of C$1.10 per US$, what is your break-even price?

(3) Calculate your gross profit and net profit per contract if the spot rate at the end of December is indeed C$0.95/US$.

(4) Recalculate your gross profit and net profit per contract if the spot rate at the end of June is C$1.30/US$.