Conversely had the dollar continued to appreciate and the option was exercised, it would have to move to 3.8. Given this spread, the forward provided the safer bet with a better overall return given the speculation the dollar would actually drop rendering an option useless. Ruhnau felt the 50/50 forward contract made the most sense given his speculation of the dollar dropping against the DM...
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Deciding to go with the option vs. going uncovered is ultimately a question of risk tolerance. He had already covered 50% of the transaction with futures and so the question becomes one of risk tolerance for the remaining half of the transaction. At the time of writing, and without further context the historical trajectory of the dollar over the previous year was 2...
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