With a forward exchange contract, you determine today the conversion rate of the currency you will receive (in the case of a sale)  or pay (in the case of purchases) at a given maturity. This way you eliminate all bad surprises.

Forward exchange contracts can be concluded with terms from 1 business day to 10 years.

Options on currencies : fix now the minimum or the maximum currency price of a future transaction.

An option gives you the right, but not the obligation to buy a certain amount of currency. You can choose to exercise it or not, according to the evolution of the currency involved.

The option sets a predetermined price for buying (call option) or selling (put option) the currency during a set period (American-style options) or on a set date (European-style options).

An option has a lifetime of a week or longer.

On the day you need to buy or sell the currency, you only have to compare its rate on the spot market with the rate your option guarantees and to choose the more profitable of the two.

Cylinder : hedge your exchange risk at zero cost !

A cylinder combines a call and a put option. It fixes a range of exchange rates, confined between the exercise price of the call option and that of the put option.

As the buyer, it protects you from a rise in the exchange rate and allows you to benefit from a lower sales price.  Inversely, it protects you, as the seller, from a fall in the exchange rate and allows you to benefit from a higher sales price.

On the expiry date you never pay more than the exchange rate cap (or receive less than the exchange rate floor) and never less than the agreed exchange rate floor (or more than the agreed exchange rate cap).

A cylinder has a lifetime of 1 week and up.

Since there are two premiums involved (one paid and the other collected), the cost of the hedge is reduced, or even cancelled out ('zero cost' construction).

These are only the more commonly used of our solutions.  Find out more about hedging techniques in our extensive brochure (to be accessed from the frame "See also").