OVER and UNDER HEDGE

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Which side of exchange rate I should use in each of the following scenarios. Kindly calrify

The company is UK based and its home currency is Pound

Forward Rate 3 month : 1.7835 1.7861

If we are about to pay $ 100,000 and after having an PUT options and while doing

an option outcome we have an overhedge $2,500 situation so we sell the over hedge amount or buy an over hedge amount? At what above Forward Rate

If we are about to pay $ 100,000 and after having an PUT options and while doing

an option outcome we have an under hedge $2,500 situation so we sell the over hedge amount or buy an over hedge amount? At what above Forward Rate

If we are about to receive $ 100,000 and after having an PUT options and while doing

an option outcome we have an overhege $2,500 situation so we sell the over hedge amount

or buy an over hedge amount.? At what above Forward Rate

If we are about to receive $ 100,000 and after having an PUT options and while doing

an option outcome we have an under hedge $2,500 situation so we sell the over hedge amount or buy an over hedge amount.? At what above Forward Rate

1. If you are paying and have over hedged, then you have too much of the other currency and need to convert it back at 1.7861

2. If you are paying and have under hedged, then you do not have enough of the other currency and need therefore to cover at 1.7835 to buy more.

3. If you are receiving and have over hedged the you do not have enough receipts to convert, so you need to buy more of the other currency and convert at 1.7835

4. If you are receiving and have under hedged, then you have too much of the other currency and need to convert the extra at 1.7861

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