Sir why is this put option. I know if it was in two currency like if we had to borrow dollar 30 and because cobtract currency is in £ then i understand that to buy dollar so we sell £ which is contract currency then its put as per lecture.But i dont know if we have to borrow in £ and contract currency also £ then how to do this.Thanks
Ask the Tutor ACCA AFM
phobos12/08
11y ago#1If you are borrowing, then it is always a put option (as per my lecture).
It is because as the interest rate goes up, the futures price goes down. So you want the option to be able to sell the futures at a fixed price.
Thank you sir.
11y ago#3You are welcome :-)
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