Why dont firms always use options to hedge their risks

Reference no: EM131334850

Options can protect a firm against the downside risk of a business transaction while preserving the upside potential from the transaction.

In contrast, forward and futures contracts normally protect against the downside risk but forfeit the upside potential.

Why then don't firms always use options to hedge their risks instead of forward and futures contracts?

Reference no: EM131334850

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