[Fegu]

Key product features

•Lock-in a known exchange rate for a specific date in the future.
•Unlimited upside.
•Unlimited downside.
•Zero premium.

Forward description/scenario

• The Vanilla Forward is a fixed contract to exchange one currency for another at the outright forward rate.
• Entering into a Forward achieves direct exposure to moves in the underlying spot, which may be used to hedge an existing exposure or to take a view on the market.

Example trade profile



Payout profile at expiry



Payoff description

• At maturity, you buy EUR at the Forward rate (1.2995).
• If the spot exchange rate at maturity is higher than the agreed Forward rate, you will purchase EUR and sell USD at 1.2995 and realise a profit.
• If the spot exchange rate at maturity is lower than the agreed Forward rate, you will buy EUR and sell USD at 1.2995, a rate less beneficial than spot.