You expect to receive 5,000,000 Swiss Franc (CHF) from the importer 90 days later. You want to hedge against possible devaluation of CHF in the coming 90 days. The table below shows you about derivatives (futures and options) available to you.

7. If you decide to use futures on CHF, which position (Long or Short) will you take on futures and how many contracts will you need to fully hedge?

8. Instead of using futures, you want to enjoy upside potential while protecting from downside risk. Should you buy a PUT option on CHF or a CALL option on CHF and how many PUT or CALL contracts will you need to fully hedge?

9. Using your answer from question 8, what is your net proceed in dollar (including premium) if the spot rate at the end of 90 days is $0.91/CHF?

10. Using your answer from question 8, what is your net proceed in dollar (including premium) if the spot rate at the end of 90 days is $0.97/CHF?

	Futures	Call Option	Put Option
Contract Size	CHF 125,000.00	CHF 62,500.00	CHF 62,500.00
Spot Rate($/SF) today	0.95
Future Rate ($/SF) today	0.9
Strike Price ($/SF)		0.95	0.95
Premium $ per SF		$0.0040	$0.005