When to use zero-premium collar options as the method of hedging
If it is not wise to always hedge via zero-premium collar options and you should never pay a premium to buy outright call and put currency options – what is the right approach?
Hedge accounting FX options: time versus intrinsic value
Learn how FX options lock in the certainty of worst case exchange rate outcomes while allowing participation in favourable rate movements.
Impact of path dependent options
One of the difficulties companies face when using path dependent options, such as leveraged collars or participating forwards, is that the amount of cover in place will alter under different market conditions. Example: NZ based…
Hedging, and a deeper look into the types of Financial Hedges
Financial hedging involves buying and selling foreign exchange instruments that are dealt by banks and foreign exchange brokers. There are three common types of instruments used: forward contracts, currency options, and currency swaps.
Hedging Basics: Average Price Currency Options
Movements between currency pairs can be swift and choppy. Using average price currency options can be a significant help in smoothing a corporation’s cash flows.
Hedging Basics: A Currency Pair Risk Reversal
Learn about one of the most interesting strategies used by investors or treasurers to hedge their exposures to the currency markets: risk reversal.
Hedging Basics: FX Hedging Using a Currency Put
Learn about one of the easiest and most effective ways to hedge a currency position, by purchasing a protective currency put.