Diamond Shamrock Corp, an American oil refinery and gas station company, is due to pay a Canadian supplier CAD750,000 in three months time. It is now 15 January 2022 (15/1/2022). Relevant data from the foreign currency and money market is given below:

Exchange rates quoted today are:

Spot rate USD/CAD = 1.2700 - 1.2800

One month forward rate USD/CAD = 1.2620 - 1.2750

Three-month forward rate USD/CAD = 1.2500 - 1.2670

Six-month forward rate USD/CAD = 1.2380 - 1.2600

Interest rates:

CAD = 2% - 4%

USD = 6% - 8%

Futures market (CAD62,500 contracts, margins are USD 1,000 per contract)

March (3) CAD/USD = 0.7900

June (6) CAD/USD = 0.8020

September (9) CAD/USD = 0.8120

Options market (CAD62,500 contracts, premiums are quoted in cents per CAD)

Call Option Put option

Exercise price June September June September

0.7900 2.90 3.65 0.20 0.32

0.8100 1.60 2.35 1.05 1.80

0.8300 0.87 1.10 2.10 2.98

Calculate the dollar payment using each type of hedging technique suggested by the information above and determine the best technique for the company.