Short call on one currency same as shot put on other

CFA Level III
#1

Can someone please explain how a short call on currency B is the same as a short put on currency A?

#2

Yep. Also, a long call on one currency is a long put on the other.

#3

A short call on currency B (priced in currency A) means that the option holder can force you to sell the notional amount of currency B to them in exchange for a given (notional) amount of currency A.

A short put on currency A (priced in currency B) means that the option holder can force you to buy the notional amount of currency A from them in exchange for a given (notional) amount of currency B.

Either way, you’re forced to hand over the notional amount of currency B, and to receive the notional amount of currency A. They’re identical.

(By the way: I like the title: a _ shot put _ in another currency.!)

#4

Can we illustrate with an example?

Take USD/AUD. A Short Put on the USD = Short Call of AUD ?

A Short Call on the AUD means that the option holder can force you to sell the notional amount of AUD for a given amount of USD?

A Short Put on USD means that the option holder can force you to buy the notional amount of USD for a given amount of AUD?

Thanks S2000Magician

#5

Great !.Thank you so much for your precise explanation!

#6

My pleasure.