On October 1, 2013, Eagle Company Forecasts the Purchase of Inventory

On October 1, 2013, Eagle Company forecasts the purchase of inventory from a British supplier on February 1, 2014, at a price of 100,000 British pounds. On October 1, 2013, Eagle pays $1,800 for a three-month call option on 100,000 pounds with a strike price of $2.00 per pound. The option is considered to be a cash flow hedge of a forecasted foreign currency transaction. On December 31, 2013, the option has a fair value of $1,600. The following spot exchange rates apply: $\begin{array}{|l|c|}\hline \text { Date } & \text { Spot Rate } \\\hline \text { October 1, 2013 } & \$ 2.00 \\\hline \text { December 31,2013 } & \$ 1.97 \\\hline \text { February 1,2014 } & \$ 2.01 \\\hline\end{array}$ What is the amount of option expense for 2014 from these transactions?

A) $1,000.
B) $1,600.
C) $2,500.
D) $2,600.
E) $0.