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Unlike forward contracts, options offer a firm an opportunity to make money, for a firm can call its option whenever the "striking price" that it paid for the currency falls behind the spot price. For example, suppose a firm purchases a 30-day option to buy British pounds at a "striking price" of $1.05 each. If the pound reaches $1 .06, the firm will exercise its option and then sell the pounds in the spot market, earning a one-cent profit on each pound. Should the price drop to $1 .04, the firm does not have to exercise its option.
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