This is the first time in “at least a decade” that the firm has actively hedged part of its exposure. For every 1 cent drop in the EURO it reduces revenue by $45 million according to CFO, Tom Szlosek. He also commented that the “prospect of going to $1.10, $1.20 is very real”
I guess the bottom is in for the EURUSD now. Just kidding….; )
So if every 100 pips it costs $45 million that equated to:
1 pip = $10 per lot
100 pips = $10 x 100 pips = $1,000 per lot
If they lose $45,000,000 for every 100 pips, what is that in terms of lots?
45,000,000/ $1,000/lot = 45,000 lots
They want to hedge 1/2 of their risk.
I guess it goes to show, how insignificant most of us are, and also why we should follow the price action (and tools I might add) as we are simply a gnat on the back of elephants.
