The spot rate of the Australian dollar is $0.74. A call option on Australian dollars with a three-month expiration date has an exercise price of $0.75 and a premium of $0.05. A put option on Australian dollars at the money with a three-month expiration date has a premium of 0.04. You expect the Australian dollar’s spot rate to decline over time and be $0.68 in three months.

Assume that one option contract specifies 100 units.
a. Today, Frank purchased a total of 10 call option contracts on Australian dollars with a
three-month expiration date. Estimate his total profit or loss at the end of three months.
(Assume that the options would be exercised on the expiration date or not at all)
b. Today, Mary sold a total of 15 put option contracts on Australian dollars with a threemonth expiration date. Estimate her total profit or loss at the end of three months.
(Assume that the options would be exercised on the expiration date or not at all)