What would be his net profit if the spot rate at the end

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John is a Forex trader. He focuses principally on the Singapore dollar/Us dollar (S$/$) cross-rate.

The current spot rate is S$1.44/$. After considerable study, he concludes that the exchange rate, in the coming 180 days, will probably be about S$1.50/$. He has the following options on the Singapore dollar to choose from:

Option

Strike Price

Premium

Put on S$

S$1.4700/$

S$0.003/$

Call on S$

S$1.4700/$

S$0.004/$

Discuss whether he should buy a Put on S$ or Call on S$, and what would be his net profit if the spot rate at the end of the 180 days is indeed S$1.50/$.

Reference no: EM131961252

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