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.

Benefits

  • 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.

Considerations

  • A premium is payable.

  • The strike rate may be less favourable than the prevailing spot rate at the time you buy the option.

Understanding Vanilla FX Options

Watch this short video to learn how Vanilla Options work for both importers and exporters, as well as how they could help your business in managing your foreign currency risk.

Watch how Vanilla FX Options could help you manage FX risk | View transcript (DOCX, 21KB)

There are two types of Vanilla FX Options

Managing foreign exchange

Movements in foreign exchange rates can impact businesses differently, so it's important to have a strategy tailored to your specific needs.

Learn with NAB

Foreign Exchange with NAB

Read about managing your exposure to changes in the foreign currency market.

Forward Exchange Contracts

Understanding Foreign Exchange risk is important. Learn how Forward Exchange Contracts can be useful.

Markets Preference Centre, opens in a new window

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.

We're ready to help you

Request a call back
Call 1300 960 355

Mon-Fri 8am - 6pm (AEST/AEDT)

Talk to an expert