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