What are vanilla fx options?

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.

There are two types of Vanilla FX Options

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