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TEK wishes to hedge a EUR4,000,000 account receivable arising from a sale to Olivetti (Italy).Payment from Olivetti is due in three months.TEK's Italian unit does not have ready access to local currency borrowing, eliminating the money market hedge alternative.Citibank has offered TEK the following quotes:

Spot rate

USD1.2000/EUR

3 month forward rate

USD1.2180/EUR

Three month euro interest rate

4.2% per year

3 month put option on euros at strike price of USD1.0800/EUR

3.4%

TEK's weighted average cost of capital

9.8%

Which alternative should TEK choose if it prefers to "play it safe"? Why?