Put / Call Option — OpenTuition Forums

AAaron4y ago

Good Morning Sir Just wanted some clarification on the below if that's okay In Gogarth March / June 21 as the exercise price is quoted US / MR we need to use a call option to buy MR to receive dollars, is that right? Likewise in Washi September 18 as the option is JPY / Euro we need to use a put option to receive Euro's by selling Euro's Understanding that in Washi as it's direct method rec fx use lhr and gogarth indirect method use right hand rate for forwards / futures etc I am a bit confused when to use a put or a call option

John MoffatTutor4y ago#1

In Washi, they are receiving Euros. Therefore they need to sell Euros. The option contract size is quoted in Euros and therefore they need options to sell i.e. put options in Euros. In Gogarth they have a new receipt in $'s. Therefore they need to sell $'s and buy Ringgit. The option contract size is quoted in Ringgit and therefore they need options to buy i.e. call options in Ringgit's. I really do suggest that you watch my free lectures on the management of foreign exchange risk because I do explain all of this in detail :-)

AAaron4y ago#2

Thank you so much John for your help that has cleared perfectly, yes I agree but time is not on my side!

John MoffatTutor4y ago#3

You are welcome :-)

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