Business clients Managing risks Currency risk Currency option

Currency risk

Currency option is an alternative to forward deal, if You wish to manage the risk from changes in the exchange rate. Option allows You to benefit from future deals, when the exchange rates moves in a favourable direction, as You will choose the rate at which to buy or sell.

Currency option gives You the right (but not the obligation) to buy or sell an agreed amount of currency at an agreed rate and on an agreed date. Upon concluding the option deal, the client pays the bank the price of the option, or the premium. The size of the premium depends on the exchange rate of the currencies, the deadline of the option, the realisation price, and the volatility of the exchange rates.

Conditions

  • The minimum amount of the deal depends on currency pair, deal period and the realisation price.
  • The deal period is up to 1 year.
  • The option contract can be sold back to the bank before the option matures, at a price calculated using the prevailing market conditions.

To start an option deal