Hedging using options as compared to futures contracts

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Reference no: EM131928016

A certain US airline receives a considerable portion of its revenues in euros, and is concerned about exchange rate risk. Two hedging choices being considered are (i) futures contracts on the euro and (ii) call or put options on the euro. First, explain whether this firm should (i) buy or sell futures contracts (ii) buy call or put options. Second, discuss the advantages and disadvantages of hedging using options as compared to futures contracts.

Reference no: EM131928016

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