suppose x need to pay JY 500000 on 30 th june and he want to cover risk.
spot (JY/INR)
1.9516/1.9711
Forex currency option
Strike price JY 2.125
Call option JY .047
PUT option JY. .098
Doubt: he should enter call option or put option?
thanks in advance
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put option or call option
Replies (1)
X will have the fear of Increasing in JY or decreasing in INR
he will take put option in INR (as rate is quoted in INR/JY only)
if on Settlement date INR decreases or JY increases
He will use his put option and net settle the Transaction with more INR
which will be used for paying extra JY
he will take put option in INR (as rate is quoted in INR/JY only)
if on Settlement date INR decreases or JY increases
He will use his put option and net settle the Transaction with more INR
which will be used for paying extra JY
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