Interest rate options

Thank you John for your lovely lectures.

I’m very confused on how to determining whether to exercise the option or throwing it away.

For example, if I am borrowing money and I would option hedge at 5.45%, this means that I have a right to sell options at 94.55 at a future date.

And at a future date when the borrowing starts if the futures went up to 95.47 because I’m selling the futures at 94.55 and buying back at 95.47, I would not exercise the option.

Is my assumption/judgement correct? Can I use this method on deciding to exercise or not exercise when a question such as this comes up from the exam?

Hope my explanations are well demonstrated.