We help Professional Clients incorporate FX Options and Structured Derivative Products into their FX risk management strategy.
Please kindly contact Jack Georgeson directly regarding all FX Option and Structured FX Product Questions and Enquiries.
Phone: +44 (0) 203 854 6802
Email: jackgeorgeson@gsnfx.co.uk
We assess business objectives and motivations in hedging currency exposures.
We evaluate the appropriateness of various strategies based on client professional categorisation and experience.
We can show analysis of the cost (upfront and implied) of various strategies.
We often compare and contrast a number of structured product solutions.
Once appropriateness is categorised, we help clients develop a broad view of the disadvantages, risks and advantages of various strategies.
We help clients make informed decisions.
We raise awareness of the disadvantages, risks and advantages of each strategy.
We help clients compare and contrast different strategies.
We often develop flexible delivery solutions.
Allowing clients to utilise contracts and match payment cash flow needs.
All solutions are customised and based on specific client needs.
We can tailor all available types of FX option solutions based on appropriateness.
Reach out today for a no obligation discussion.
FX Options allow professional clients to manage the FX risk of unfavourable exchange movements. They additionally provide varying degrees of participation in favourable exchange rate movements. There are a broad range for FX Option Forward products available in the UK. If you are currently using specific products either with an FX provider or a bank, we are very open to having a discussion with you. We can review all aspects of your FX risk management strategy to gauge if there are any elements we can improve or add extra value.
FX Options are regulated products thus to discuss pricing and specific product mechanics in detail, we would first need to determine appropriateness. Our FX Options offering is available to professional clients.
An FX Forward Contract provides a single price protection for a specific amount of currency which can be utilised either at a future date or over a period between a start date and maturity. A forward contract provides a very simple and clear method of hedging foreign exchange risk. The key downside of fixing a single price is the inability of participating in favourable exchange rate movements over the contract term. Levels could improve favourably meaning you could exchange at the live FX market price at a better level than is secured via the Forward. In this scenario you are committed to the forward contract price and are unable to achieve any participation or extra improvement in levels.
Forward Contracts offer a simple method of securing FX risk. A single price is secured protecting against unfavourable exchange rate risk and the contract outcome is very clear. Structured Products and FX Forward Options add a layer of complexity which means they are not always appropriate.
Often the outcome of an FX Option is not known until the maturity of the product which leaves some uncertainty during the contract period as to the performance.
In the same way as committing to a single price Forward Contract, a Forward FX Option also has the same potential for commitments to specific amounts of currency at future dates. Appropriateness must be determined before these products can be discussed specifically and are only suitable to professional clients. There are also risks associated with these products which means clients need to be familiar with the process and mechanics and have previously used the same or similar products.
We focus on helping clients protect business commercial margins. We can show a variety of solutions which operate in a similar way to a single price Forward Contract but allow some degree of Forward participation should levels trend favourably. We find it useful to compare a number of suitable Forward Option Products against a single price Forward Contract. This provides a clear and balanced view of the downsides, risks and extra potential benefits of a variety of solutions.
Prior to discussing any pricing or specific Structured Products, we would first need to determine appropriateness. We classify clients as either Per Se or Elective Professional and this is used to ensure the risks and complexities of the derivative products are suitable for Corporate FX Risk Management strategies and objectives.
A key problem with many FX Risk Management strategies and decisions is cashflow considerations. Often contracts are delayed and are not completed within the expected initial timeframes. Equally, payment timings can often change and be delayed for a wide variety of reasons.
There are ways to solve this problem. If cashflow timings are subject to change and this is a major reason impacting your FX hedging decisions. We can often help resolve such challenges allowing clients to manage FX risk on a more flexible basis. This helps alleviate concerns that funds will not be available to settle contracts at maturity. It equally helps by allowing the early delivery of contracts if cashflow timings are brought forward.
If you use FX Hedging valuations for month-end or year-end accounts. A factor to consider is FX Forward Options will be valued in a different way to a single price Forward Contract. We can provide contract valuations at any time throughout the contract lifecycles. If the mark to market value of contracts is being reflected in annual accounts, then it is worthwhile reviewing the mark to market profiles of various FX Risk Management solutions.
Ratio and leverage are key risk factors for FX Options which often make them unsuitable and inappropriate. The goals of utilising FX Forward Options for risk management are to protect commercial business margins.
Some FX Forward Option Products include varying degrees of participation in favourable exchange rate movements. We would first need to determine appropriateness before discussing individual products, please reach out for a discussion if you currently use FX Options or are investigating using them for Commercial FX Hedging.
There are some scenarios when you can swap, extend or roll an FX Forward Option at expiry into a single price Forward Contract to be utilised at a future date. This might be useful if cashflows have changed and you require more time before funds are available for settlement. If cashflow flexibility is a problem or challenge with your current FX risk management strategies then please reach out for a discussion. Flexibility is a key area where we aim to help clients in all aspects of Currency Risk Management.
FX Forward Options carry complexities and risks when compared to a single price FX Forward Contract. This is the key reason they are only appropriate to professional clients. They are regulated products and we must first confirm suitability before discussing specific products.
Some products include high-risk elements and are very rarely appropriate for FX Risk Management purposes. For an effective FX Hedging Strategy, the goal should be to protect commercial business margins by having protection against unfavourable exchange rate movements. This can be achieved using a single price Forward Contract or an FX Forward Option. Each solution has disadvantages, risks and benefits. We aim to help provide a balanced view allowing you to compare a variety of FX Hedging Solutions.
Please reach out by phone or email.
We are always happy to help and discuss your requirements.
