Currency Option & Trigger Related Options

  • currency option and trigger related options currency option and trigger related options

    Another hedging solution to manage your Foreign Exchange exposures efficiently

Features & Benefits

Currency Option provides Corporate treasurers another avenue to manage foreign exchange exposures as the foreign exchange risks of the purchaser of options is known and limited to the premium paid out.

For Trigger Related Options, Corporate treasurers will be able to take delivery at a preset special rate on a given value date which is more favorable than the market traded forward rate. To enjoy this rate, Corporate treasurers agree not to take delivery of the currency under preset conditions from the effective date of the contract.

  • Enjoy the ability to hedge your foreign exchange exposures.
  • A defensive strategy for hedgers who wish to insure against their FX exposures where the FX risk is known to the hedgers and limited to the premium paid out.
  • Currency Option is a contract granting the buyer of the contract the right, but not the obligation, to exchange a fixed amount of one currency for another at a fixed exchange rate at or within a specified future date.
  • Basically, there are two kinds of Currency Options:
    1. Call option is the right, but not the obligation, to buy a currency against another
    2. Put option is the right, but not the obligation, to sell a currency against another
  • Currency Option pricing is dependent on the following factors:
    1. spot exchange rate
    2. strike price
    3. interest rates of the currency pair
    4. time to expiration
    5. expected volatility of the exchange rate
    6. intrinsic features of the option (whether American or European, vanilla or barrier, etc.)

The price or fee in which the buyer pays the writer of the option is the premium of the option. The decision to exercise the option is dependent on the strike price versus the spot price.

  • Suitable for customers with a higher risk tolerance, strong view of the market and lesser constraint in timing of requirements.
  • Ideal under slowing volatility market conditions in range-bound trading currency pairs.
  • Savings cost achieved through structure as opposed to contracting on market rate.
  • Available in different currencies (for example SGD, USD, EUR, JPY etc)
  • Flexible choice of tenure
  • No upfront fees payable/charged

If the trigger is "touched" early in the product lifecycle, the hedger's remaining requirements may have to be re-hedged at a relatively worse rate under that market condition.

Apply Now

  • To apply, all corporations have to set up a FX Line with the Bank. The FX line states the maximum amount and tenure that you may contract at any one time.
  • If your business currently has credit facilities (e.g. Letter of Credit, Trust Receipts or Overdraft line) with the Bank, you can arrange with your banker to restructure the credit line to accommodate the additional FX facility by earmarking a portion of the existing facilities.

More Information

Visit us at:

United Overseas Bank Limited

Financial Institution Sales

80 Raffles Place

5th Storey UOB Plaza 1

Singapore 048624

Tel: 6233 6032