1. Currency Straddles Refer to

1. Currency Straddles Refer to the previous question, but assume that the call and put option premiums are $.035 per unit and $.025 per unit, respectively. (See Appendix B in this chapter.)

a. Construct a contingency graph for a long pound straddle.

b. Construct a contingency graph for a short pound straddle.

2. Currency Strangles For the following options available on Australian dollars (A$), construct a worksheet and contingency graph for a long strangle.

Locate the break-even points for this strangle.

(See Appendix B in this chapter.)

■ Put option strike price = $.67

■ Call option strike price = $.65.

■ Put option premium = $.01 per unit.

■ Call option premium = $.02 per unit

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1. Currency Straddles Refer to

1. Currency Straddles Refer to the previous question, but assume that the call and put option premiums are $.02 per unit and $.015 per unit, respectively. (See Appendix B in this chapter.)

a. Construct a contingency graph for a long euro straddle.

b. Construct a contingency graph for a short euro straddle.

2. Currency Option Contingency Graphs (See

Appendix B in this chapter.) The current spot rate of the Singapore dollar (S$) is $.50. The following option information is available:

■ Call option premium on Singapore dollar

(S$) = $.015.

■ Put option premium on Singapore dollar

(S$) = $.009.

■ Call and put option strike price = $.55.

■ One option contract represents S$70,000.

Construct a contingency graph for a short straddle using these options.

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