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Put or call option foreign exchange risk

This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.

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February 25, 2021 at 5:12 pm #611703
malristanben
Member
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I am having some trouble understanding whether to pick a put or call option to hedge against risk. The calculations that come after is fine. Appreciate any explanation on this. Thanks
February 26, 2021 at 7:34 am #611744
John Moffat
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- Topics: 57
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It depends on which currency the option contracts are quoted in.
If they are quoted in $’s and the transaction involves buying $’s, then we buy a call option in $’s.
If they are quoted in $’s and the transaction involves selling $’s then we will buy a put option in $’s.
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