Overview

Foreign Exchange Options

A foreign exchange (FX) option is a type of contract that gives the buyer the right (but not the obligation) to buy one currency and sell another at an agreed rate in the future. This is known as a vanilla option.

In addition to vanilla options, Smart Currency Business can offer a variety of structured FX options. These products are created by combining two or more FX options contracts to create a more bespoke solution with variable and tailored contract specifications.

Our dedicated team of qualified risk management professionals takes the time to fully understand your current and potential future exposures, conducting thorough reviews of risks and assessing potential impacts on your business. We’ll then work with you to create bespoke solutions to reduce or minimise risk.

At the end of this process, you will have a currency hedging strategy designed specifically for your business, which protects you against currency volatility and, in certain instances, allows you to react when the markets move.

Our Range of Options includes:

• Vanilla options – Vanilla options are an agreement between two parties that gives the buyer of the option the right, but not the obligation, to buy or sell one currency in exchange for another at an agreed exchange rate on a predetermined date
• Collar options – Collar options provide you with a known worst-case rate (known as the protection rate) and a best-case rate (known as the collar rate), which you can use to transact on a given date in the future.
• Participating forward – A participating forward provides a secured protected rate, while still allowing beneficial moves on a predetermined portion of the amount hedged.
• Forward extra – A forward extra provides a secure protection rate, while still allowing beneficial moves up to a pre-determined trigger level.