4 Explain what is meant by a currency option. Provide a worked example of a currency option strategy and the reasons for its use. Explain why currency put options are not necessarily a bearish investment. (25 marks)

Malaika plc, a British company, is planning to make a payment in euros of €150 million at the end of September.
However, the nearest maturity date for a euro futures contract is at 13 December and it is now 29 January. The face value of one euro futures contract is €250,000. The spot rate today is €1.49/£ and the futures rate is €1.45/£.