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article :exchange traded foreign exchangederivative

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › article :exchange traded foreign exchangederivative

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 3, 2017 at 2:50 pm #375309
    numera
    Member
    • Topics: 30
    • Replies: 44
    • ☆☆

    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.

    https://www.accaglobal.com/lk/en/student/exam-support-resources/professional-exams-study-resources/p4/technical-articles/exchange-derivatives.html

    thanks alot

    March 3, 2017 at 3:32 pm #375318
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    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.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘article :exchange traded foreign exchangederivative’ is closed to new replies.

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