Currency Options
Increasingly, businesses are finding success in international markets. At the same time, international payments and foreign currency exchange can increase your exposure to rapidly fluctuating economic conditions and their inherent risk: volatile currency markets can raise expenses, diminish profits, and make accurate long term planning virtually impossible. Specific risk management tools, such as Currency Options, will help you to properly manage this risk.
Currency Options provide the holder with unlimited protection against an adverse spot movement so that your position is fully hedged. By having a fixed minimum target rate in place, your company will know the absolute maximum cost for a given transaction. At the same time, you are able take advantage of positive changes in market exchange rates.
Currency Options may be used alone or in combination with other hedging tools such as Forward Contracts and Market Orders to offer a company a powerful risk management strategy.
Custom House Currency Options
- Vanilla Options - Exchange currency at a predetermined rate and benefit from favourable market shifts. The risk taken is limited to the premium paid.
- Range Forward - Establish both a worst case rate and a best case rate. Know from the outset the range in which you will be able to exchange your currency.
- Forward Extra - Take advantage of favourable market rates up to a preset ‘trigger level’. If the market is unfavourable, you are still protected by a predetermined transaction rate.
- Bonus Forward - Establish ‘trigger rates’ so that wherever the market is at expiry, your position is completely hedged against movement within your predetermined range.
- Participating Forward - Exchange a higher notional amount at expiry if your forward is in-the-money or more favourable than the current market rate; if your forward rate is not favourable, exchange less currency on your forward and more currency on the spot market.
- Target Forward - Take advantage of a Target Forward, where the call and the put have the same strike and expiry date but different notional amounts, at a price that is more favorable than an equivalent forward rate.
- Convertible Options - Maintain a position that is fully hedged but also take advantage of favourable market movements if the market trades below a pre-set trigger level.
Preserve Profits and Stabilize Costs
We tailor our services to meet your unique requirements. Our trading experts will work with you to ensure that all your foreign currency transactions are conducted in a way that best suits your business goals. Custom House’s trading experts can also assist you in developing an overall hedging strategy that suits your unique needs.
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Industry Solutions
We can work with you to customize a global payment solution that precisely meets your specific requirements.
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Purchase Currency Options
To purchase an option, please contact:
Mark Frey, VP FX Trading
Phone: 250.220.1015 ext. 226
