Domestic Payoff: Put option on the exchange rate. Formula: Hd = max (Xd - Sd, 0) Xd = 1.15

Foreign Payoff: Call option on the exchange rate.

There is a pairing for European Call and Put options on the opposite sides of the currency exchange market that have financially equivalent payoffs. A call option on the domestic side of the market can always be matched by a put option with a financially equivalent payoff on the foreign side of the market. As can be seen from the diagram, PAT can easily identify such financially equivalent payoffs.