Dear John,
While solving the past papers , I am having a confusion in deciding whether to go for call or put options for both currency and interest options.
Can you please explain how to make a choice between a Call and a put for both the options while solving the past paper.
Regards
Sarosh
ACCA Forums
AFMHow to Decide between Call and put options
7y ago#1With currency options, if the transaction involves buying the contract currency then you buy call options. If the transaction involves selling the contract currency then you buy put options. The contract currency is the currency in which the contract size is quoted in the question.
With interest rate options (which are options on futures), if borrowing money then you buy put options, if depositing money then you buy call options.
This is all explained in detail in my free lectures on foreign exchange risk management and on interest rate risk management.
7y ago#2But that does not answer what Sarosh Awan was asking!!!
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