Currency Hedging Strategy for GlobalCo

GlobalCo, a multinational corporation, has significant revenues derived from its operations in Europe, which are exposed to euro (EUR) fluctuations. The CFO of GlobalCo is concerned about currency risk due to the potential appreciation of the euro against the US dollar (USD) over the next year. To manage this risk, the CFO is considering various currency hedging strategies.

One proposed strategy involves entering a forward contract to sell euros for dollars at a predetermined rate. Another option discussed is to utilize options on euros to provide flexibility in case the euro depreciates instead. Lastly, the idea of maintaining a natural hedge by balancing euro revenues with euro-denominated expenses was presented.

Which of the following strategies directly protects GlobalCo from the risk of euro appreciation against the dollar?