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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › article :exchange traded foreign exchangederivative
hi sir,
i was reading this article.
in the “options” part this article is choosing a “put” although the contract is a receipt in the foreign currency.
as i have done my initial studies on forex from the open tuition lectures i learnt to choose a put option when there is a “payment ” in a foreign currecy.
the logic being we will sell base currency to purchase the foreign.
so i just want to confirm if my knowledge is correct and if im missing something in this article.
thanks alot
The receipt is in Euros, so since the company is in the UK, they will be selling euros to buy GBP.
The option contract size is in Euros, and so they need options to sell euros – so put options.