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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › put call
John Sir,
Please clarify for me.
when do we buy or sell a put ,or buy or sell a call
buy the base currency=call option
Assuming that you are referring to foreign currency options (because interest rate options work differently), then call options give you the right to buy the contract currency (the currency in which the contract size is quoted) and put options give you the right to sell that currency.
So which you choose depends on whether you are buying or selling the contract currency on the future date.
You do not sell put or call foreign exchange options. (You might well sell futures, and certainly with interest rate options you might sell options if you are creating a collar).
You really should watch the free lectures on foreign exchange risk management – I obviously cannot type out all of the lectures here.