A cogeneration project which bought an equipment from a British for 800,000 on 3 month credit wants to hedge its accounts payable against currency risk. It is considering using either currency forward or currency options contracts. If the following information is available on these contracts, what would you advise them to use? Justify your recommendation.

Forward contract: A three-month forward rate is $1.5400/

Options contract: A three-month call at strike price of 1.5300 is priced at $0.50/

A three-month put at strike price of 1.5300 is priced at $0.75/