Forex Investment and Currency Trading

A Knock-in Tunnel is a zero-cost structure that is similar to a standard Tunnel, except the potential benefit rate is unknown at inception. If spot trades at the knock-in level before expiry, the structure knocks into a regular tunnel that has a benefit level worse than a standard tunnel. If spot does not trade at [...]

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Tunnel
The Tunnel establishes a range within which currencies may be exchanged on a specific date in the future. The range of possible exchange rates are bound by a worst-case or “protection” rate and by a best-case or “benefit” rate. The Tunnel is structured as a combination of two out-of-the-money options, where the purchaser of the [...]

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A buyer of a CAD Call buys the right, without the obligation, to exchange a fixed currency amount for another at a set strike price on a specific future date. Unlike a spot or forward transaction, the buyer of the CAD Call is not obligated to buy CAD. If USD/CAD spot at expiration is below [...]

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