Foreign exchange options can be extremely versatile currency risk management tools. An option contract could help your business reduce the risks associated with foreign currency exposure by providing protection against unfavourable moves in the market. In addition, they can offer you the flexibility to take advantage of favourable moves should they occur.
Options can be thought of as an agreement between two parties where an exchange rate is agreed for a future date. The date can be set anywhere from one week to two years from the period when the contract is agreed. The contract gives your business the right – but not the obligation – to exchange money at the pre-agreed rate. So if, for example, the market is worse than the pre-agreed rate at the time you wish to exchange, you can choose to use a spot contract instead. It depends on which of the two is more favourable to your business.
The above is entirely dependent on the specific type of foreign exchange option you decide to take out with us. We offer a variety of different options contracts depending on your specific requirements.
Our option contracts are offered through Smart Currency Options, which is a wholly owned subsidiary of Smart Currency Exchange. We are regulated by the Financial Conduct Authority (FCA No 656427).