The spot exchange rate between Australian
dollars (AUD) and US Dollars (USD) is AUD 1.00 = USD 0.72. You believe that in
4 weeks time, the exchange rate will be AUD 1.00 = USD 0.69. Options are currently available
with a strike price of AUD 1.00 = USD 0.725.

Which option position is best suited to profit if
your speculation proves to be correct?

Question

The spot exchange rate between Australian
dollars (AUD) and US Dollars (USD) is AUD 1.00 = USD 0.72. You believe that in
4 weeks time, the exchange rate will be AUD 1.00  = USD 0.69. Options are currently available
with a strike price of AUD 1.00 = USD 0.725.

Which option position is best suited to profit if
your speculation proves to be correct?

Answer

A long put option covering USD 10,000

Answer

A long call option covering USD 10,000

Answer

Both of the above will profit if your prediction proves to be correct.

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The spot exchange rate between Australian dollars (AUD) and US Dollars (USD) is ...

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