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Key product features

•Participate in a favourable move in the underlying exchange rate.
•The holder of the option has unlimited participation on the upside with limited exposure to the downside.
•The downside is limited to the upfront premium paid.

Product description/scenario

•A European style Vanilla Call Option gives the holder the right but not the obligation to buy (the base currency) at a known exchange rate (strike) at a given date in the future (expiry) for a set fee (premium).
•The option can only be exercised based on spot at the cut-off time on the expiry date.
•This is called a Plain Vanilla Call Option or just a Vanilla Call Option.

Example trade profile


Payout profile at expiry


Payoff description

• If spot at expiry is:
– Above strike (1.3500), you buy EUR 1mio, sells USD 1.35mio.
– Below strike (1.3500), there is no obligation to trade at the less advantageous option strike, you are free to trade at the prevailing market spot rate.

Variations

• Vanilla Put:
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• Deferred Premium Vanilla Option
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