# Which currency to hedge a position in FX options?

Let's assume a bank sells to a client a put of \$1,000,000 dollars on USDJPY at 110 in 6 months. The delta of this put is -0.6, spot is 112. So to hedge its position the bank has to short \$600,000 dollars.

Two questions :

• Why couldn't the bank hedge in JPY as, if the client exercices, they will have to give him JPY instead of USD ?
• Does it change something if this option's prenium is in EUR ? Does the bank stil have to hedge in USD ?
• If you have a put on GOOG you hedge using GOOG stock, if you have a put on USD you hedge using USD. GOOG and USD are the underlying you are betting on. – Alex C Oct 20 '19 at 18:34
• Yes, i know but as for those options there are two currencies, i was wondering if it was equivalent. So when i say 'could they hedge in JPY' it would have been the same for the put on GOOG if i've said 'could they hedge in USD' ? – TmSmth Oct 20 '19 at 19:16
• On your second question, do you mean the option is EURUSD? Or it is USDJPY but the premium is paid in EUR? – AlRacoon Oct 22 '19 at 2:15
• The prenium in EUR, thanks for your first answer, i'm waiting for the second answer to validate it ! – TmSmth Oct 22 '19 at 7:39