4. As a US importer, we have the option of hedging with forwards, options, or...
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4. As a US importer, we have the option of hedging with forwards, options, or not hedging. The size of the transaction is 6.04 million British Pounds. There are 62,500 pounds in 1 option contract.
Now End
Spot 1.240-41 $/L 1.100-01 $/L
Forward 1.230-31 $/L
Call .04$ 0
Put .03$ .14
a) How much would you receive/pay if you had hedged with forwards?
b) How much would you receive/pay if you had hedged with options?
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