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Sarah works as a forex trader

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Sarah works as a forex trader. She has recently seen that the euro has appreciated significantly versus the US currency. The euro is now worth $1.15 per dollar. She feels that the euro will continue to vary significantly in the coming months after reading a range of publications on the issue. Although most pundits expect the euro will fall versus the dollar in the near future, Sarah believes there is a significant chance of additional strengthening. A call option on euros is now available with an exercise price of $1.17 and a premium of $.04. There is also a euro put option with an exercise price of $1.17 and a premium of $.03. Additional information; 62,500 unit per (a) At option expiration, the value of the euro is $1.30. What is Sarah's total profit or loss from a long straddle position? Provide answer in per unit and per contact (62,500 unit per contract) (5 marks) (b) What is Sarah's total profit or loss from a long straddle position if the value of the euro is $1.05 at option expiration? Provide answer in per unit and per contact (62,500 unit per contract) (5 marks) (c) Given your answers to the questions above, define and analyze, when is it advantageous for a speculator to engage in a long straddle? (10 marks) (d) Define and analyze, when is it advantageous to engage in a short straddle? (10 marks)