Compound options is an efficient way for risk managers to take advantage of current USD weakness and hedge possible exposures for 2009 and beyond in advance of the normal planning/budgeting/hedging cycles for those periods.
A compound is an option to buy an option at a date in the future for an agreed strike and option premium today. Put differently, hedger enters into an option and receives the right to use the option hedge (with the strike rate set at today’s levels) at a later time.
A compound option is flexible in the sense that hedger can choose the amount of premium to [...]
Entries Tagged as 'FOREX Options'
Compound Options to Take Advantage of Current Rates for Future Periods
March 26th, 2008 · No Comments
Tags: FOREX Options
USD/SGD Options
March 26th, 2008 · No Comments
Options Perspective: USD/SGD
With the current climate of USD selling, we have seen USD/SGD slide to a low of 1.3733 in recent weeks. We have recovered above 1.38 now and while we do expect the SGD to continue to appreciate in the medium term, a shortterm rally in USD/SGD is likely, but topside should be capped at 1.415. The MAS policy meeting on the April 10 is of particular importance and the bank’s view on this is that this will cause USD/SGD to rally in the near term as the central bank should choose to put more emphasis on economic growth. [...]
Tags: FOREX Options
