Risk management ( snap shot)

Sir please correct me if I am wrong .

For currency futures
If receiving money – we buy futures ( because we are receiving payment in different currency so we are going to buy our own currency and if the contracts are in our own currency we buy futures now and sell later)

For payment ..we sell futures ,( the opposite of above)

On the transaction date

We convert the transaction amount at prevailing spot rate at that transaction date ,,( am I right here)

Then we close future deal by comparing future rate at the date we entered the deal and future rate as of transaction date ..based on buy or sell …then we take that gain or loss and we convert it first in our own currency and then get final answer

For hedge efficiency ..we use original spot rate converted transaction amout in numerator and transaction date spot rate converted amount in denominator multiplied with 100%

For currency options

Transaction amount by prevailing spot rate ( depend on buying or selling rate that is lower for buying and higher for selling ) ….this is settlement

And gain on options is the comparison between the spot rate ( as of transaction date and strike price chosen ) if the strike price is more than spot rate ……we don’t excercise and if strike price is less we do excercise ,( please correct me I guess it’s wrongly put) ..

After which the gain is converted back to currency needed

Which on adding gives final outcome

The premium is converted on spot ..which is substracting to get net outcome