Today Is April 1st and You're French If You Hedge Using a Forward Contract, the Bank Requires

Today is April 1st and you're French. You hold $1 million worth of American securities. You fear a depreciation of the dollar. The spot exchange rate is 0.80 $/€ or 1.25 €/$. The forward rate maturing July 1 is 1.255 €/$. Currency options on the euro are traded in Chicago. They are options on 1 euro, maturing July 1 and whose prices (premium and strike) are given in U.S. cents in the following table:
$$\begin{array} { l c r } & { \text { Premium } } \\ \text { Strike } & \text { Gall } & \text { Put } \\\hline 80 & 2 & 2 \\85 & 0 .2 & 5.4 \\\hline\end{array}$$ If you hedge using a forward contract, the bank requires no deposit. If you buy options, you must sell some of your U.S. securities in order to buy these options. You assume that your securities will keep exactly the same value on July 1.
a. You decide to hedge. What will be the euro value of your portfolio on July 1?
b. You decide to insure your portfolio using currency options. Do you need to buy/sell calls €/
puts €?
c. Assume that you use options with a strike of 80 U.S. cents. How many options do you need to insure perfectly your portfolio?
d. Same question with options with a strike of 85?
e. Simulate the results of your hedge and insurance with the two options if the spot exchange rate on July 1 is equal to 0.70 $/€, 0.80 $/€, and 0.90 $/€. Fill the following table with the value of the portfolio in euros:
Portfolio Value in Euros on July 1:
$$\begin{array}{l}\quad \quad \quad \quad \quad \quad \text { Orieinal Partfalia\quad With Hedege \quad With Calls } 80 \quad \text { With Calls } 85\\\begin{array} { l l } S = 0.70 \$ / \epsilon & 1,428,571 \\S= 0.80 \$ / \epsilon & 1,250,000 \\S = 0.90 \$ / \epsilon & 1,111,111\end{array}\end{array}$$ f. What is the best choice if you think that the chances of the depreciation of the $ are very weak but still exist.