Given the above information, calculate the number of put options to be purchased, choose an exercise price and the corresponding put premium, and calculate the total premium. Collect the July 13, 2018 closing spot price then compare the July 13, 2018 spot price vs the exercise price, and then decide whether to exercise the option if the exercise price is greater than the spot price, OR let the option expire if the exercise price is less than the spot price.

July 9, 2018 FX Risk Management Project Explanation on Philadelphia Stock Exchange Option Quotation (Nasdaq OMX FX Options Product Specifications) Euro US$-settled currency options are quoted in terms of US$ per unit of the underlying currency (). Premium is paid and received in US$. Contract size: 10,000 Contract point value $100 [($0.01) x (10,000)] Premium quotation: one point = $100 A premium quote of 2.13 = $213.00

Option Chain for PHLX U.S. Dollar-Settled Euro Currency (July 9, 2018

Spot exchange rate (on 7/9/18): 117.33 US cents per One option: 10,000 Maturity date Root Strike (Exercise) (US cents per ) Call last (US cents per ) Put last (US cents per ) July 13, 2018 XDE 113.00 5.20 0.70 OUT OF July 13, 2018 XDE 114.00 4.80 1.00 July 13, 2018 XDE 115.00 4.25 1.35 July 13, 2018 XDE 116.00 3.74 1.80 July 13, 2018 XDE 117.00 3.00 2.15

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July 13, 2018 XDE 117.50 2.65 2.40 AT THE MONEY

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July 13, 2018 XDE 118.00 2.18 2.90 IN July 13, 2018 XDE 119.00 1.75 3.45 July 13, 2018 XDE 120.00 1.18 3.90 July 13, 2018 XDE 121.00 1.00 4.40 July 13, 2018 XDE 122.00 0.85 4.90

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IN THE MONEY

Steps: 1.Calculate number of put options to purchase (round up) 2.Choose an exercise price and the corresponding put premium 3.Calculate total premium Example: Account receivable = 1,521,300 A.On July 9, 2018 1.???????????? ???? ?????? ??????????????= (1,521,30010,000)=152.13 ???? 153 2.Chose E = 116.00 with a put premium = 3.74 US cents per Cost of one put option = ($0.0374) x (10,000) = $374 ($374) x ($153) = $57222.00

B.On July 13, 2018 1.Collect July 13, 2018 closing spot price from the WSJ2 (1.1071)

2.Compare 7/13/18 spot price (1.1701) vs your exercise price:

3.Exercise the option if the Exercise price > Spot priceLet the option expire and sell in the spot market if the E < S