If selling the base currency is essential to implement a hedge, what is the appropriate core hedge structure?

In a currency hedging context, when selling the base currency is essential to implement a hedge, the appropriate core hedge structure involves using a long put option and/or a short forward contract.

A long put option provides the right, but not the obligation, to sell the base currency at a predetermined strike price. This is particularly useful if you anticipate that the value of the base currency may decline, as it allows you to sell the currency at the higher strike price, thus mitigating potential losses.

On the other hand, a short forward contract involves agreeing to sell the base currency at a specified future date for an agreed-upon price. This directly locks in the price at which you can sell the currency, providing certainty and protection against unfavorable currency fluctuations.

This combination effectively allows for good management of currency exposure, making it the appropriate hedge structure when the strategy involves selling the base currency.

The other options either do not align with the goal of selling the base currency or involve different strategies that may not provide the same level of hedging effectiveness in the context described. For instance, a short call option and/or a long futures contract would typically be used when there is a desire to hedge against price increases rather than to sell a currency, which is opposite to the