Trident CFO, Maria Gonzalez, has just complete a purchase of communication equipment from a British firm for 1 million due in three months. Suppose that:

• Three-month forward rate is $1.7540/.
• The spot rate is $1.7640/.
• UK three-month borrowing rate is 10.0% (2.5% per quarter)
• UK three-month investing interest rate is 6.0% (1.5% per quarter)
• US three-month borrowing interest rate is 8.0% (2% per quarter)
• US three-month investing interest rate is 4.0% (1% per quarter)
• Three-month call option for 1 million with strike price $1.75/ is 1.0% premium
• Three-month put option for 1 million with strike price $1.75/ is 1.5% premium

Trident s cost of capital is 12% (3% per quarter)

How does Trident hedge on the option market?

Buy put option with $26460

Buy put option with $17640

Buy call option with $26460

Buy call option with $17640