Amen Bank's trading room offers a wide range of exchange solutions to meet your needs.
WHAT IS A CURRENCY EXCHANGE OPTION?
An exchange option is a right and not an obligation to buy (CALL) or sell (PUT) a predetermined amount in foreign currencies, on a predetermined future date and at an agreed exchange rate (option strike price) , against the payment of a premium.
TERMINOLOGY
CALL option = an option that grants the right to buy currencies at maturity.
PUT option = an option that grants the right to sell currencies at maturity.
Strike price = the price agreed upon at the conclusion of the contract at which the buyer of the option will have the right to buy (in the case of a CALL) or sell (in the case of a PUT) the currencies at maturity.
Premium = price of the option paid by the customer to AMEN BANK two business days after the date of acquisition of the option.
ADVANTAGES OF EXCHANGE OPTIONS
Enjoy a favorable option...
The biggest advantage of foreign exchange options over the exchange rate is the possibility to take advantage of a favorable market trend. If, at maturity, the spot market prices are more favorable than the strike price of the option, then you can give up your option right and unwind your spot transaction in the market.
Limit your losses...
The second advantage is that with the exchange options, the maximum loss you are likely to incur is limited to the amount of the premium.
The third advantage that currency options offer is the ability to define by yourself the hedge price you want, allowing you to choose a more unfavorable price than the futures price and thus lower the premium to be paid.