Two British pound () put options are available with exercise prices of $1.64 and $1.68. The premiums associated with these options are $0.04 and $0.06 per unit, respectively. One option contract represents 31,250.

	Value of British Pound at Option Expiration
	$1.58	$1.64	$1.68	$1.74
Put @ $1.64	$	$	$	$
Put @ $1.68	$	$	$	$
Net	$	$	$	$

1. Describe how a bull spread can be constructed using these put options. What is the difference between using put options versus call options to construct a bull spread?

   A bull spread can be constructed with buying the ($1.64, or $1.68) put option and writing the ($1.64, $1.68) put option. The difference between using call and put options to construct a bull spread is that using put options results in a (credit, debit) spread.

2. Complete the worksheet for the bull spread. Use a minus sign to enter loss values, if any. If the answer is zero, enter "0". Round your answers to the nearest cent.

3. At option expiration, the spot rate of the pound is $1.64. What is the bull spreaders total gain or loss? Use a minus sign to enter loss values, if any. Round your answer to the nearest dollar.

   $

4. At option expiration, the spot rate of the pound is $1.61. What is the bear spreaders total gain or loss? Use a minus sign to enter loss values, if any. Round your answer to the nearest dollar.