Category: FX

Exotic FX Options

The terms and conditions of the F/X options incorporate by reference such credit and other terms as the parties may establish through their pre-existing bilateral agreement. The F/X options have the following characteristics:
   
Contract Overview: An exotic foreign-exchange option (or F/X option) is a derivative financial instrument that gives one party the right, but not the obligation, to buy or sell a specific quantity of one currency in exchange for another currency at a pre-arranged exchange rate on a specified date, with additional features to determine price, exercisability, termination or value that may be based on any number of factors, averages, indices or time periods. A listing of major F/X options appears below.
Trade Date: The date on which the parties enter into the options contract.
Option Style: European Style: A European style option allows the holder to exercise only at the expiration date, i.e. a single pre-defined point in time.

American Style: An American style option allows the owner to exercise the option at any time before the expiration date.
Call Currency: Currency for call option.
Put Currency: Currency for put option.
Strike Price: The price at which an investor can exercise an option.
Rebate: A feature of some exotic options where the premium of the option is refunded if at the time the option expires it has no value.
Expiration Date: The date at which the option contract expires.
Expiration Time: The time on which the option contract expires.
Settlement Date: The date on which the option settles.
Premium: Premium amount expressed in the premium currency.
Premium Currency: Currency in which the option premium is expressed.
Premium Date: The date on which the premium amount is due.
Quoting Convention & Min Increment Notional amount, agreed by the counterparties.
Minimum Size: Notional amount, agreed by the counterparties.
Notional Currency: Currency in which the contract size is expressed.

Non-deliverable Forwards

The terms and conditions of the swaps incorporate by reference such credit and other terms as the parties may establish through their pre-existing bilateral agreement. The swpas have the following characteristics:
   
Contract Overview: An NDF is a forward contract in which the counterparties settle the difference between the NDF price or rate and the prevailing spot price or rate on an agreed upon notional amount.
Reference Currency: Non-deliverable currency:
CNY Chinese Renminbi
IDR Indonesian Rupiah
INR Indian Rupee
KRW South Korean Won
MYR Malaysian Ringgit
PHO Philippine Peso
TWD Taiwan Dollar
VND Vietnamese Dong
EGP Egyptian Pound
RUB Russian Ruble
KZT Kazakh Tenge
ARS Argentine Peso
BRL Brazilian Real
CLP Chilean Peso
COP Colombian Peso
GTQ Guatemalan Quetzal
PEN Peruvian Nuevo Sol
UYU Uruguayan Peso
VEB Venezuelan Bolivar
Settlement Currency: See list below.
Notional Currency: Currency iin which the contract size is expressed.
Trade Date: The date on which the parties enter into the contract.
Quoting Convention & Min Increment: Notional amount, agreed by the counterparties.
Minimum Size: Notional amount, agreed by the counterparties.
Trading Conventions: Buy or Sell which refers to the contract size expressed in notional currency.
Forward Rate: Currency Exchange Rate expressed as the amount of Reference Currency per unit of Settlement Currency.
Settlement Date: The date on which the option settles.
Fixing Date: The date on which the difference between the prevailing market exchange rate and the agreed forward exchange rate is calculated.
Settlement Procedure: Bilateral settlement performed in settlement currency.

Vanilla FX Options

The terms and conditions of the F/X options incorporate by reference such credit and other terms as the parties may establish through their pre-existing bilateral agreement. The F/X options have the following characteristics:
   
Contract Overview: A vanilla F/X option is a derivative financial instrument that gives one party the right, but not the obligation, to exchange money denominated in one currecy into another currecy at a pre-arranged exchange rate on a specified date.
Trade Date: The date on which the parties enter into the options contract.
Option Style: European Style: A European style option allows the holder to exercise only at the expiration date, i.e. a single pre-defined point in time.

American Style: An American style option allows the owner to exercise the option at any time before the expiration date.
Call Currency: Currency for call option.
Put Currency: Currency for put option.
Strike Price: The price at which an investor can exercise an option.
Rebate: A feature of some exotic options where the premium of the option is refunded if at the time the option expires it has no value.
Expiration Date: The date at which the option contract expires.
Expiration Time: The time on which the option contract expires.
Settlement Date: The date on which the option settles.
Premium: Premium amount expressed in the premium currency.
Premium Currency: Currency in which the option premium is expressed.
Premium Date: The date on which the premium amount is due.
Quoting Convention & Min Increment Notional amount, agreed by the counterparties.
Minimum Size: Notional amount, agreed by the counterparties.
Notional Currency: Currency in which the contract size is expressed.