A forward contract locks in a future exchange rate. You have agreed to exchange ${formatCurrency(hedgedAmount, currency)} at a rate of $${forwardRate.toFixed(4)}.

• Cost of hedged portion: ${formatCurrency(hedgedAmount, currency)} * $${forwardRate.toFixed(4)} = ${formatAsUSD(hedgedPortionCost)}.
• Cost of unhedged portion: ${formatCurrency(unhedgedAmount, currency)} * $${expectedFutureSpotRate.toFixed(4)} = ${formatAsUSD(unhedgedPortionCost)}.

`; } else if (hedgeInstrument === 'option') { const premiumCost = hedgedAmount * optionPremium; let transactionCost = 0; if (exposureType === 'payable') { // Buying foreign currency (Call Option logic) if (expectedFutureSpotRate > optionStrike) { // It's cheaper to exercise the option transactionCost = hedgedAmount * optionStrike; explanation = `

Strategy: Currency Option (Payable)

The future spot rate ($${expectedFutureSpotRate.toFixed(4)}) is higher than your option's strike price ($${optionStrike.toFixed(4)}). It's beneficial to exercise the option.

`; } else { // Let the option expire, buy at the better spot rate transactionCost = hedgedAmount * expectedFutureSpotRate; explanation = `

Strategy: Currency Option (Payable)

The future spot rate ($${expectedFutureSpotRate.toFixed(4)}) is lower than your option's strike price ($${optionStrike.toFixed(4)}). You let the option expire worthless and buy currency at the more favorable spot rate.

`; } } else { // Receivable - Selling foreign currency (Put Option logic) if (expectedFutureSpotRate < optionStrike) { // It's better to exercise the option to sell at the higher strike price transactionCost = hedgedAmount * optionStrike; explanation = `

Strategy: Currency Option (Receivable)

The future spot rate ($${expectedFutureSpotRate.toFixed(4)}) is lower than your option's strike price ($${optionStrike.toFixed(4)}). It's beneficial to exercise the option to sell at the higher strike price.

`; } else { // Let the option expire, sell at the better spot rate transactionCost = hedgedAmount * expectedFutureSpotRate; explanation = `

Strategy: Currency Option (Receivable)

The future spot rate ($${expectedFutureSpotRate.toFixed(4)}) is higher than your option's strike price ($${optionStrike.toFixed(4)}). You let the option expire worthless and sell currency at the more favorable spot rate.

`; } } hedgedPortionCost = transactionCost + (exposureType === 'payable' ? premiumCost : -premiumCost); explanation += `

• Cost of transaction for hedged portion: ${formatAsUSD(transactionCost)}.
• Cost of premium: ${formatCurrency(hedgedAmount, currency)} * $${optionPremium.toFixed(4)} = ${formatAsUSD(premiumCost)}. This is an upfront cost for payables and reduces revenue for receivables.
• Net cost of hedged portion: ${formatAsUSD(hedgedPortionCost)}.
• Cost of unhedged portion: ${formatCurrency(unhedgedAmount, currency)} * $${expectedFutureSpotRate.toFixed(4)} = ${formatAsUSD(unhedgedPortionCost)}.

`; } hedgedCostTotal = hedgedPortionCost + unhedgedPortionCost; effectiveRate = hedgedCostTotal / exposureAmount; // 3. Strategy P/L let pnl = unhedgedCostTotal - hedgedCostTotal; if(exposureType === 'receivable'){ // For receivables, a higher USD amount is better. pnl = hedgedCostTotal - unhedgedCostTotal; } // Display results const resultsSection = document.getElementById('results-section'); if (resultsSection) resultsSection.style.display = 'block'; const unhedgedCostEl = document.getElementById('unhedged-cost'); if (unhedgedCostEl) unhedgedCostEl.textContent = formatAsUSD(unhedgedCostTotal); const hedgedCostEl = document.getElementById('hedged-cost'); if (hedgedCostEl) hedgedCostEl.textContent = formatAsUSD(hedgedCostTotal); const effectiveRateEl = document.getElementById('effective-rate'); if (effectiveRateEl) effectiveRateEl.textContent = `$${effectiveRate.toFixed(4)}`; const pnlEl = document.getElementById('strategy-pnl'); if (pnlEl) { pnlEl.textContent = `${formatAsUSD(Math.abs(pnl))}`; pnlEl.className = pnl >= 0 ? 'gain' : 'loss'; pnlEl.textContent += pnl >= 0 ? ' Gain' : ' Loss'; } const explanationEl = document.getElementById('explanation-section'); if(explanationEl) explanationEl.innerHTML = explanation; // Navigate to results tab navigateToTab('results-tab'); } function formatAsUSD(amount) { return new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(amount); } function formatCurrency(amount, currencyCode) { return new Intl.NumberFormat('en-US', { style: 'currency', currency: currencyCode, minimumFractionDigits: 2, maximumFractionDigits: 2 }).format(amount).replace(currencyCode, "").trim() + ` ${currencyCode}`; } function generatePdf() { const { jsPDF } = window.jspdf; const content = document.getElementById('pdf-content'); if (!content) { console.error('PDF content area not found.'); return; } const pdfButton = document.getElementById('pdf-download-button'); if (pdfButton) pdfButton.style.display = 'none'; html2canvas(content, { scale: 2, backgroundColor: '#ffffff', useCORS: true }).then(canvas => { if (pdfButton) pdfButton.style.display = 'block'; const imgData = canvas.toDataURL('image/png'); const pdf = new jsPDF({ orientation: 'p', unit: 'mm', format: 'a4' }); const pdfWidth = pdf.internal.pageSize.getWidth(); const pdfHeight = pdf.internal.pageSize.getHeight(); const canvasWidth = canvas.width; const canvasHeight = canvas.height; const ratio = canvasWidth / canvasHeight; let imgWidth = pdfWidth - 20; let imgHeight = imgWidth / ratio; if (imgHeight > pdfHeight - 20) { imgHeight = pdfHeight - 20; imgWidth = imgHeight * ratio; } const x = (pdfWidth - imgWidth) / 2; const y = 10; pdf.addImage(imgData, 'PNG', x, y, imgWidth, imgHeight); pdf.save('Hedging_Simulation_Results.pdf'); }).catch(err => { console.error('Error generating PDF:', err); if (pdfButton) pdfButton.style.display = 'block'; }); }