74. Company XYZ operates in the US. On June 1, 2019, it has a net trade receivable of EUR 5,000,000 from an export contract to Germany. The company expects to receive this amount on December 1, 2019. The CFO of XYZ wants to protect the value of this receivable. On June 1, 2019, the EUR spot rate is USD 1.19 per EUR 1, and the 6-month EUR forward rate is USD 1.17 per EUR 1. The CFO can lock in an exchange rate by taking a position in the forward contract. Alternatively, the CFO can sell a 6-month EUR 5,000,000 call option with strike price of USD 1.19 per EUR 1.

In assessing the potential hedging strategy, the CFO thinks that selling an option is better than taking a forward position because if the EUR appreciates against the USD, XYZ can take delivery of the USD at USD 1.19 per EUR 1, while if the EUR depreciates against the USD, the contract will not be exercised and XYZ will pocket the premium obtained from selling the call option. What can be concluded about the CFO's analysis?