Foreign Exchange Options

If you regularly buy or sell currency and are looking to hedge as part of a long-term strategy, FX Options are available for you. 

Flexibility to suit you

Global Reach Markets Limited (formerly known as Corporate FX+ Limited) is a subsidiary of Global Reach Partners and are able to offer extended choice of FX Options.

These allow you to set an agreed protection rate but with the opportunity to benefit from favourable currency moves.

Options Products

The Participating Forward

To take out a Participating Forward contract, you need to advise us of the amount, the currencies involved, the expiry date and the protected rate at which you would like to buy your foreign currency. We will tell you the level of participation/percentage you can benefit from.

Key facts

  • A deposit line is required but this is less than the equivalent forward.
  • Available in any currency pair where there is a liquid forward market.
  • This foreign exchange option is subject to variation margin.

Advantages of

The Participating Forward

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How does The Participating Forward work?

For example, you import materials from the US and have to pay a supplier $1,000,000 in six months time. The forward rate for six months is 1.60. You would like to benefit from favourable exchange rate moves but are reluctant to pay a premium for this. You inform us that you are prepared to accept a protected rate of 1.57. We then calculate the participation level to be 50 percent.

Advantages of The Participating Forward

  • No premium is payable for this product.
  • 100 % protection on the currency exposure.
  • This allows you to benefit from favourable currency moves on a percentage of your total exposure.
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Risk Reversal

In order to take out a Risk Reversal contract you need to advise us of the amount, the currencies involved, the expiry date and the budget rate at which you would like to buy foreign currency. We can then inform you of the best case rate for a zero cost structure.

Key facts

  • Premium will be required
  • The protected rate will always be less favourable than the forward rate.
  • You may be obliged to purchase your currency below the market price.

Advantages of

Risk
Reversal

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How does Risk Reversal work?

For example, you import materials from the US and have to pay a supplier $1,000.000 in six months time (sell GBP and buy USD). The forward rate for six months is 1.60. You would like to benefit from exchange rate. You inform us that you are prepared to accept a protection rate of 1.58. We then calculate the best case (which is dependant on market variables at the time) to be 1.68.

Advantages of Risk Reversal

  • 100% protection on the currency exposure.
  • Benefit from favourable currency moves up to an agreed limit.
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Vanilla Protection

To buy a Vanilla Protection you need to advise us of the amount, the currencies involved, the strike price and the expiry date. We will then inform you what the premium for the structure will be (which is dependent on market variables at the time).

Key facts

  • A premium is required within 48 hours.
  • Available in any currency pair where there is a liquid forward market.
  • Excellent for hedging forward cash flows.
  • Important information – a premium is charged.

Advantages of

Vanilla
Protection

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How does Vanilla Protection work?

For example, you import materials from the US and have to pay a supplier $1,000.000 in six months time (sell GBP and buy USD). You wish to ensure a minimum rate of 1.56 for 6 months expiry but would like to benefit if the market moves higher. You buy a six month option at 1.56 USD Call for $1,000,000 with a premium of 2.9% of your hedged amount.

Advantages of Vanilla Protection

  • 100% protection on the currency exposure.
  • Allows you to benefit 100% from a favourable currency move.
  • Allows you to hedge uncertain cash flows without obligation.
  • No deposit is required.
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Windowed Forward Extra

A Windowed Forward Extra minimises risk by providing 100% protection against exchange rate fluctuations at an agreed rate. This allows you to benefit from favourable moves in the exchange rate to a pre-agreed barrier level. This fixed strike price (protection rate) and time window determines the rate at which you can buy currency.

Key facts

  • No premium is required.
  • Available in any currency pair where there is a liquid forward market.
  • Effective for medium or long-term risk management.
  • 100% protection against negative exchange rate moves.

Advantages of

Windowed
Forward Extra

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How does Windowed Forward Extra work?

For example, you import materials from the US and have to pay a supplier $1,000.000 in six months time (sell GBP and buy USD). You wish to ensure a minimum rate of 1.56 for 6 months expiry but would like to benefit if the market moves higher. You buy a six month option at 1.56 USD Call for $1,000,000 with a premium of 2.9% of your hedged amount.

Advantages of Windowed Forward Extra

  • Your business is 100% protected against negative moves in the exchange rate.
  • You’re not required to pay a premium
  • It’s effective for medium or long-term risk management
  • The fixed strike price (protection rate) will be lower than the fixed strike price on a standard forward contract
  • If the barrier is reached, your business is obliged to buy currency at the fixed protection rate
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