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About FX Options

FX Option buyers have the right (not obligation) to make a sale or purchase transaction of a currency against another currency with a predetermined exchange rate, amount and due date. To get this right, FX Option buyers must pay upfront a number of premiums to FX sellers Option.

Analogy Option

Call Option : The right to buy a currency against another currency
Put Option : The right to sell a currency against another currency

Another variation of FX Options

FX Today

Exchange of funds is carried out on the same day as the transaction date

The USD Call Option application	The Put Option USD application
Suppose there is an importer customer who has an obligation to pay USD 1 million to overseas suppliers within the next 1 month. Customers have the view that the USD tends to strengthen against IDR and wants to get protection from the increase in the exchange rate. At the same time, customers also want to get the flexibility to buy USD at a cheaper rate, if it turns out the estimates are wrong. If at this time, the assumption of the Spot USD / IDR exchange rate = 8,800, customers are advised to buy a USD Call Option with a Strike rate = 9,000 and the premium paid is IDR 100. At the date of the exercise Option, if the Spot exchange rate (eg 9,200)> the Strike rate (9,000), the customer will exercise the Option (buy USD at the rate of 9,000). Conversely, if the Spot exchange rate (eg 8,700) <Strike rate (9,000), then the customer does not have to exercise an option and he will buy USD with a lower market rate. In this case, the customer's loss is only limited to the premium paid (IDR 100).	Suppose there are exporters who will receive a payment of USD 1 million from overseas buyers within the next 1 month. Customers have the view that the USD tends to weaken against IDR and wants to get protection from the decline in the exchange rate. At the same time, customers also want to get the flexibility to sell USD at a higher rate, if it turns out the estimates are wrong. If at this time, the assumption of the Spot USD / IDR exchange rate = 8.800, customers are advised to buy a Put Put USD with a Strike rate = 8,500 and the premium paid is IDR 100. At the date of the exercise Option, if the Spot exchange rate (eg 8,300) <Strike rate (8,500), then the customer will exercise Option (selling USD with the rate of 8,500). Conversely, if the Spot rate (for example 9,000)> Strike rate (8,500), then the customer does not have to exercise an option and he will sell USD with a higher market rate. In this case, the customer's loss is only limited to the premium paid (IDR 100).

The USD Call Option application

The Put Option USD application

Suppose there is an importer customer who has an obligation to pay USD 1 million to overseas suppliers within the next 1 month. Customers have the view that the USD tends to strengthen against IDR and wants to get protection from the increase in the exchange rate. At the same time, customers also want to get the flexibility to buy USD at a cheaper rate, if it turns out the estimates are wrong.

If at this time, the assumption of the Spot USD / IDR exchange rate = 8,800, customers are advised to buy a USD Call Option with a Strike rate = 9,000 and the premium paid is IDR 100.

At the date of the exercise Option, if the Spot exchange rate (eg 9,200)> the Strike rate (9,000), the customer will exercise the Option (buy USD at the rate of 9,000).

Conversely, if the Spot exchange rate (eg 8,700) <Strike rate (9,000), then the customer does not have to exercise an option and he will buy USD with a lower market rate.

In this case, the customer's loss is only limited to the premium paid (IDR 100).

Suppose there are exporters who will receive a payment of USD 1 million from overseas buyers within the next 1 month. Customers have the view that the USD tends to weaken against IDR and wants to get protection from the decline in the exchange rate. At the same time, customers also want to get the flexibility to sell USD at a higher rate, if it turns out the estimates are wrong.

If at this time, the assumption of the Spot USD / IDR exchange rate = 8.800, customers are advised to buy a Put Put USD with a Strike rate = 8,500 and the premium paid is IDR 100.

At the date of the exercise Option, if the Spot exchange rate (eg 8,300) <Strike rate (8,500), then the customer will exercise Option (selling USD with the rate of 8,500).

Conversely, if the Spot rate (for example 9,000)> Strike rate (8,500), then the customer does not have to exercise an option and he will sell USD with a higher market rate.

In this case, the customer's loss is only limited to the premium paid (IDR 100).

Analogy

Currently, you plan to buy a car for IDR 100 million in the next 3 months. Because of the high demand, you are worried that the price of the car will become more expensive after 3 months later.
It turns out that the car salesman gives you a proposal as follows: If you are willing to pay a premium of IDR 5 million, you are guaranteed to buy the car for IDR 100 million at 3 months later.
If you take this proposal, then you are an Option buyer and the salesman is an Option seller. IDR 5 million is the Option premium, IDR 100 million is the Strike Option rate and 3 months is the Option term.
When due (3 months later):
- If the price of the car is> IDR 100 million, then you will exercise the option (buy the car for IDR 100 million).
- If the car price is

About FX Options

Another variation of FX Options

Analogy

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