Simple interest or compound interest in Option/FRA compound, interest, actually, one, simple

sabre

When we use option to hedge interest rate risk, the option on Libor rate or FRA are ofter used.
I found in FRA calculation, we often use compound interest; while in option hedge, we often use simple interest.
Is this a rule or we actually can use any one in calculation?

mik82

Can anybody help on this?

infinitybenzo

I was told that LIBOR is not for compounding...