Options with and without basis risk

John, can you please confirm my understanding on options:

1. With basis risk

We calculate unexpired basis and value of futures on exercise date. Compare value of futures on exercise date and value of option to get result on option.

2. Without basis risk

When question says basis risk can be ignored and requires us to build hedging stratage using options if LIBOR rise by 1% or fall by 1%. We take value of futures now add/ deduct expected increase/decrease of 1% of LIBOR to get value of futures on exercise date (i.e. no calculation of unexpired basis as in 1 is required). Again compare futures on exercise date and option and calculates result on option.

Is that correct?

Thank you,

Sergey.