# 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

# 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.