Vanilla FX Options provide the right (but not an obligation) to buy or sell a specified amount of one currency in exchange for another currency, at a rate agreed when the option is bought (strike rate), on an agreed settlement date.
They offer full protection against unfavourable changes in foreign currency values. You can benefit from a favourable exchange rate movement by transacting at the prevailing spot rate.
Determine and budget your cash flows.
The opportunity to benefit from favourable foreign exchange movements.
Protection against the direct impact of unfavourable changes in foreign currency values.
Allows you to manage your foreign exchange risk and provides flexibility if your circumstances change.
A premium is payable.
The strike rate may be less favourable than the prevailing spot rate at the time you buy the option.
Watch this short video to learn how Vanilla FX Options work for both importers and exporters, as well as how they could help your business in managing your foreign currency risk.
The right, but not the obligation, to sell a specified amount of one currency in exchange for another currency at a rate agreed when the option is bought (strike rate), on an agreed settlement date.
Offers full protection against unfavourable changes in foreign currency values. You can benefit from a favourable exchange rate movement by transacting at the prevailing spot rate.
Benefits:
Points to consider:
Put Option could be suitable:
The right, but not the obligation, to buy a specified amount of one currency in exchange for another currency at a rate agreed when the option is bought (strike rate), on an agreed settlement date.
Offers full protection against unfavourable changes in foreign currency values. You can benefit from a favourable exchange rate movement by transacting at the prevailing spot rate.
Benefits:
Points to consider:
Call Option could be suitable:
Read about managing your exposure to changes in the foreign currency market.
Understanding Foreign Exchange risk is important. Learn how Forward Exchange Contracts can be useful.
Education, insights and Market Alerts. Also, get our FX Newsletter delivered straight to your inbox.
Important information
The information provided in this webpage is intended to be of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information that you read on this webpage, National Australia Bank Limited (ABN 12 004 044 937, AFSL and Australian Credit License 230686) (NAB) recommends that you consider whether it is appropriate for your objectives, financial situation and needs. NAB recommends that you seek independent advice and obtain and consider the relevant Product Disclosure Statement (available at Financial Markets or by calling 1800 307 827), before acting on any information on this webpage, including whether to acquire or to continue to hold a product or service mentioned.
The products on this webpage are issued by NAB.
Please consider our Financial Services Guide.
Target Market Determinations for these products are available at nab.com.au/TMD.
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