I have an accounts receivable of 3,161,325 British Pounds due on August 21, 2022 and would like to hedge my exposure by utilizing the options hedge. Specifically, I would like to buy put options to hedge my position. I will begin buying put options on August 12, 2022 (10-day span) What would be my total U.S. dollar cash inflow?

Spot Exchange rate (8/12/22): 1.2271

One British Pound Option: 10,000 British pounds

Maturity Date	Strike	Put Premium
8/21/22	1.2000	0.0070
8/21/22	1.2100	0.0090
8/21/22	1.2200	0.01
8/21/22	1.2300	0.0135
8/21/22	1.2400	0.0210
8/21/22	1.2500	0.0290

Answer rating: 100% (QA)

To hedge your exposure you want to buy put options with a strike price that will allow you to sell your British pounds at a favorable exchange rate Yo... View the full answer