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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
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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