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Hello,
When we are hedging the $84m borrowing, we have exercised the option to take advantage of the favourable strike of 95.25 over the expected futures price of 94.81.
However, why does this result in a loss? I thought that this would give a gain of $184,800 because we are taking advantage of a favourable strike. Why would we exercise the option to give a loss?!
Thanks
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