A Japanese Exporter has a Euro 1,000,000 receivable due in one year. Detail a strategy using options that will eliminate exchange rate risk and show what's the minimum Yuan revenue the Japanese firm can lock in using options?

Listed Options

Strike Puts Calls

Euro 62,500 $1.25=1.00 Euro $0.0075 per E $0.01 per E

Yen 12,500,000 $1.00= 100Yen $.0075 per 100 Yen $.01 per 100 Yen