An exporter will receive USD 3 million in six months; the forward is 84.20. Compare the forward, a zero-cost collar of 82.50 and 85.50, and a seagull that also sells an 80.50 put to lift the cap to 86.50, at final rates of 79.00, 83.00 and 88.00.

The forward always gives 84.20, Rs 25.26 crore. The collar gives Rs 24.75 crore at 79.00, Rs 24.90 crore at 83.00 and Rs 25.65 crore at 88.00. The seagull gives Rs 24.30 crore, Rs 24.90 crore and Rs 25.95 crore. The seagull earns Rs 30 lakh more than the collar when the dollar rallies, and gives back Rs 45 lakh when the dollar falls to 79.00, because below 80.50 its floor turns into a fixed 2 rupees over the market.

Start with the forward, because it is the yardstick. Nanemachi sells USD 3 million at 84.20 whatever happens, so it receives Rs 25.26 crore in every scenario. The collar lets the rate float between 82.50 and 85.50 and pins it at the nearer strike outside that band; the seagull does the same inside the band, caps at 86.50 instead of 85.50, and below 80.50 stops protecting. The table works each structure at the three rates the treasurer asked about.

A collar is like a car insurance policy with a fixed excess: past a certain point, the insurer pays everything. A seagull is the same policy with a payout limit: the insurer pays the first slice of damage and then stops, and the driver accepted the limit to get a lower premium on something else. Nanemachi's bought 82.50 put pays out as the rate falls, but its sold 80.50 put starts paying the bank once the rate goes below 80.50, so the protection stops growing at 2 rupees a dollar. At 79.00 that is 79.00 plus 2.00, which is 81.00, or Rs 24.30 crore, against the collar's Rs 24.75 crore. At 77.00 the gap would be wider still, because the collar holds 82.50 and the seagull drifts down to 79.00.

The seagull raised the cap from 85.50 to 86.50, worth Rs 30 lakh on USD 3 million if the dollar ends above 86.50. It paid for that by giving up all protection below 80.50. For an exporter whose problem is a strong rupee, that is the wrong trade: it improves the outcome Nanemachi was not worried about and worsens the one it was. A seagull suits a company that has a budget rate well below 80.50 and is willing to treat a fall that far as a risk it can bear, or one that wants to look for upside and is honest that it is doing so. Zero-cost in the bank's description means zero upfront premium; the cost is in the strikes, and the bank's margin sits inside them.

Two limits of the comparison are worth saying. Each structure here is held to the receipt date; if the shrimp buyer pays late or pays less, the options are still live and the sold ones can create a loss with no dollars behind it. And the 84.20 forward already includes the interest rate difference between rupees and dollars, so the collar's 82.50 floor is 1.70 below what the company could lock today; a treasurer should compare every structure with the forward, not with the spot rate on the day.