[Currency Futures] The following chart shows the performance of December 2018 Australian dollar futures since July 2018. Each AUD futures contract covers 100,000 Australian dollars. Today AUD trades at 0.7334 US dollars.

Questions : 1. A U.S.-based company needs to pay its Australian supplier 1,000,000 Australia dollars in December 2018. Outline a strategy using the Dec 18 AUD futures. (Specify the # of contracts needed) 2. Suppose there are currency options available traded over the counter. Should the company utilize AUD call options or AUD put options to achieve the goal? Briefly explain. 3. Compare the above two strategies. Discuss the pros and cons of each strategy. (Hint : You may refer to the following online publication on the CME Groups website -- https://www.cmegroup.com/education/files/understanding-fx-futures.pdf)

AUSTRALIAN DOLLAR FUTURES, D, CME Delayed 0.7500 H0.7337 0.7254 C07334 +0.0054 (+0.74%) 0.7450 0.7400 0.7350 0.7334 0.7300 0.7250 0.7200 0.7150 0.7100 0.7050 CMEGroup powered by TradingView n 700 Jul Aug Sep Oct Nov 26 AUSTRALIAN DOLLAR FUTURES, D, CME Delayed 0.7500 H0.7337 0.7254 C07334 +0.0054 (+0.74%) 0.7450 0.7400 0.7350 0.7334 0.7300 0.7250 0.7200 0.7150 0.7100 0.7050 CMEGroup powered by TradingView n 700 Jul Aug Sep Oct Nov 26