Interest Rate Collars – When to exercise the options

Hi John,

Referring to the ‘Fitzharris Co’ (Sep/Dec 20) question:
As borrowing is concerned, we buy PUT options and sell CALL options.
In deciding when to exercise the options, we look at the which of the futures price or options strike price is better when closing the position right? Just as stated in the sample answers:
After buying put options, the put options won’t be exercised because Fitzharris can sell the futures at a higher futures market price; call options will not be exercised if the futures can bought at a lower futures market price.

However, referring to the ‘Armstrong Group’ (Sep/Dec 15) question:
As investing is concerned, we buy CALL options and sell PUT options.
What confuses me is why in this scenario, when deciding whether to exercise the options, it is not based on closing the futures position?
For example, I thought that after buying call options, we’ll decide to exercise the call option only if we could ‘sell’ the futures at a higher exercise price (closing the position)? But in the sample answer, it seems to not be the case. Instead, the call option wasn’t exercised not because it could be sold at a higher exercise price, but it can be ‘bought’ at a lower futures market price (opening the position). I thought we were to look at when closing the position?

Is there something that I have misunderstood about how and when the interest rate collars is exercised?