Currency Option

Features and Benefits

Currency Options

• Enjoy the ability to hedge your foreign exchange exposures.
• A defensive strategy for hedgers who wish to insure against their FX exposures where the FX risk is known to the hedgers and limited to the premium paid out.
• Currency Option is a contract granting the buyer of the contract the right, but not the obligation, to exchange a fixed amount of one currency for another at a fixed exchange rate at or within a specified future date.
• Basically, there are two kinds of Currency Options:
• Call option is the right, but not the obligation, to buy a currency against another
• Put option is the right, but not the obligation, to sell a currency against another
• Currency Option pricing is dependent on the following factors:
• spot exchange rate
• strike price
• interest rates of the currency pair
• time to expiration
• expected volatility of the exchange rate
• intrinsic features of the option (whether American or European, vanilla or barrier, etc.)

The price or fee in which the buyer pays the writer of the option is the premium of the option. The decision to exercise the option is dependent on the strike price versus the spot price.

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• To apply, all corporations have to set up a FX Line with us. The FX line states the maximum amount and tenure that you may contract at any one time
• If your business currently has credit facilities (e.g. Letter of Credit, Trust Receipts or Overdraft line) with us, you can arrange with your banker to restructure the credit line to accommodate the additional FX facility