This appendix is an integral part of the Standard.
AG1-AG93 [Deleted]
Hedging (paragraphs 71-102)
Hedging instruments (paragraphs 72-77)
Qualifying instruments (paragraphs 72 and 73)
AG94 The potential loss on an option that an entity writes could be significantly greater than the potential gain in value of a related hedged item. In other words, a written option is not effective in reducing the profit or loss exposure of a hedged item. Therefore, a written option does not qualify as a hedging instrument unless it is designated as an offset to a purchased option, including one that is embedded in another financial instrument (for example, a written call option used to hedge a callable liability). In contrast, a purchased option has potential gains equal to or greater than l
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