What is the best possible hedging strategy and how many us


Tesla Inc. is expecting to receive 100,000 euro in one year. Tesla expects the spot rate of euro to be $1.49 in a year, so it decides to avoid exchange rate risk by hedging its receivables. The spot rate of the pound is quoted at $1.51. The strike price of put and call options are $1.54 and $1.53 respectively. The premium on both options is $.03. The one-year forward rate exhibits a 2.65% premium. What is the best possible hedging strategy and how many U.S. dollars Tesla will receive under this strategy?

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Finance Basics: What is the best possible hedging strategy and how many us
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