Foreign Exchange Options

Foreign exchange options are extremely versatile currency risk management tools. They give businesses who hold an option the right to buy or sell currencies at an agreed exchange rate and date should the exchange rates move against them. Importantly, they help businesses reduce the risks associated with foreign currency exposure because, if the market was to move in their favour, they can let the options contract, or part of it, expire and buy or sell the currency at the current spot rate.

What they are and how they help protect your margins

Every business has its own risk appetite and level of risk management experience.

Options can offer businesses a greater degree of flexibility but they are more complex products. They’re often used alongside other risk management tools, such as forward contracts.

Talk to our risk management specialists to discuss your individual risk management strategy.

Why Smart Currency Options?

We take the time to really understand your risk management requirements and discuss possible solutions.

Our option contracts are offered through Smart Currency Options, a wholly owned subsidiary of Smart Currency Exchange, which is regulated by the Financial Conduct Authority (FCA No 656427).

Your funds are safe and secure with us as they’re held in fully segregated accounts.

Our Options

To read more about our offering, click on the types of option contract below. For more complex requirements, we also offer bespoke solutions. Talk to our currency specialists to find out more.

Vanilla option

Gives the holder the right but not the obligation to buy or sell an underlying currency at an agreed price at a specified date.

Collar

Allows the holder to set a protected rate whilst allowing them to benefit from favourable market movements up to a best-case rate.

Participating forward

Locks in a secured rate while still allowing for favourable moves on a pre-arranged portion of the hedged amount.

Forward extra

Locks in a secured rate while still allowing for favourable moves to a pre-determined trigger level. If the trigger level is hit the holder is obligated to deal at the secured rate.

Why risk management?

Mitigating your exchange rate risk with tools such as options and forwards will:

● Help protect your profit margins
● Allow you to manage the impact foreign exchange rate risk can have on your cash flows
● Enable you to secure working capital at budget rates
● Support your balance sheet risk management
● Let you perform accurate financial forecasting
● Help you retain a competitive edge because you won’t need to increase prices when competitors have to increase theirs due to less favourable exchange rates

Fill in this quote form and discuss your requirements with us

Disclaimer:

Option contracts are offered by Smart Currency Options Limited (SCOL) on an execution-only basis. This means that you must decide if you wish to obtain such a contract, and SCOL will not offer you advice about these contracts.

This material provides you with generic and illustrative information and in no way can it be deemed to be financial, investment, tax, legal or other professional advice, a personal recommendation or an offer to enter into an option contract and it should not be relied upon as such. Any changes in exchange rates and interest rates may have an adverse effect on the value, price or structure of these instruments.

SCOL shall not be responsible for any loss arising from entering into an option contract based on this material. SCOL makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.

Foreign exchange options can carry a high degree of risk and are not suitable for everyone as they can have a negative impact on your capital. If you are in doubt as to the suitability of any foreign exchange product, SCOL strongly encourages you to seek independent advice from suitable financial advisers.

Consulting a website or receiving a publication does not constitute a customer relationship and SCOL shall not have any duty or incur any liability or responsibility towards any person or entity as a result thereof.

SCOL is a wholly-owned subsidiary of Smart Currency Exchange Limited, and is authorised and regulated by the Financial Conduct Authority to carry out MiFID business with reference number 656427.

SCOL is a private company limited by shares registered in England and Wales. Company number 9034947. The registered office address is at 26-28 Hammersmith Grove, London W6 7BA.