A Japanese exporter has a $1,000,000$ receivable due in one year. Detail a strategy using options that will eliminate exchange rate risk.

Listed Options

Strike Puts Calls

Euro$62,500$ $ $1\mathrm{.}25=1\mathrm{.}00$ $ $0\mathrm{.}0075$ per$$ $ $0\mathrm{.}01$ per$$

Yen$12,500,000$ $ $1\mathrm{.}00=100$ $ $0\mathrm{.}0075$ per$1000\mathrm{.}01$ per$100$

Multiple Choice

Sell $16$ call options on euro, buy $10$ put options on yen.

Buy $16$ put options on euro, buy $10$ call options on yen.

none of the options

Buy $16$ put options on euro, sell $10$ call options on yen.