FX options for business
Protect your business from the uncertainties of the foreign exchange market with our comprehensive forex options.
- Invaluable guidance from our team of professional account managers
- Competitive rates from over 16 different banks
- Award-winning service
- Range of vanilla and premium-free FX options
Our team of foreign exchange experts can provide customized FX solutions to help you mitigate risks and optimize your international business operations. Whether you're dealing with currency fluctuations or managing complex cross-border transactions, we can assist you in achieving your financial goals. Discover how we can help you today.
Excellence recognized
We’re proud to see our dedication to our clients recognized, further motivating us to continue pushing boundaries and setting new service standards in an ever-evolving industry.
Feefo’s 10 Years of Excellence Award
Recognizing 10 years of Feefo's Platinum-rated service
Top 100 Cross-Border Payment Company
We are proud to be listed as one of the world's top 100 cross-border payment companies (as per FX Intelligence).
Best FX for Payment Solutions
Best FX for Payments Solution in the Best FX Tech Awards as part of the Gordon W. Platt Foreign Exchange Awards 2023
Best Payments Solutions Provider
Systems In The City Fintech Awards 2022
What are forex options?
Foreign exchange or FX options are powerful, versatile tools for managing your business's currency exchange strategy. The instrument you choose will depend on your specific needs and risk tolerance. Some FX options can help you hedge against exchange rate fluctuations. In contrast, others provide potential opportunities for higher returns but come with increased risk.
At Moneycorp, we provide a comprehensive range of foreign exchange options tailored to meet the needs of your business. From vanilla options to more advanced instruments such as collars or participating forward contracts, we can offer solutions for managing currency risk, which are especially valuable during periods of market volatility.
Why would you need a foreign exchange option for your business?
If your business engages in international trade, whether importing goods, exporting products, or paying international wages, FX options can offer substantial advantages.
In a world in which foreign currency exchange rates are in a constant state of flux, businesses with international operations face significant risks. Unhedged exposure to such currency exchange rate shifts can lead to financial losses, as even minor changes in currency values can dramatically increase the cost of overseas supplier bills.
Such fluctuations in currency values can hinder your ability to forecast expenses and accurately plan for future growth. Our foreign exchange currency options offer effective tools to mitigate these risks, allowing you to concentrate on core business objectives and achieve long-term financial success.
What are the different types of forex options?
Whatever your business needs, at Moneycorp we have FX options to suit your requirements:
Vanilla options
Vanilla options provide businesses with the flexibility to buy or sell a currency at a predetermined exchange rate (known as the 'strike rate') on a specific date (the 'expiry date'). These types of FX trade options can help businesses mitigate the risks of adverse currency movements while allowing for potential gains from favorable market conditions.
It's worth noting that vanilla options carry an upfront cost known as the 'premium'.
Premium-free options
Premium-free FX options, similar to vanilla options, give businesses the opportunity to hedge against exchange rate fluctuations but without incurring upfront costs. However, this can come at the expense of certain benefits. Unlike vanilla options, premium-free options may require mandatory trading at expiration, and potential gains may be limited beyond a specific threshold.
Certain premium-free FX options enable businesses to protect themselves from adverse currency movements at a predetermined rate, while still capturing the potential upside from favorable market conditions. This makes them an attractive hedging solution for businesses looking to safeguard profit when facing unfavorable currency exchange rate fluctuations.
Moneycorp's premium-free FX options
At Moneycorp, we offer several premium-free FX options:
Collar options
Collar options allow businesses to control their exchange rate risk by limiting their exposure to currency fluctuations that occur within a certain FX rate range.
These types of forex options provide a hedge against unfavorable FX currency fluctuations by combining the purchase and sale of different options. While this limits potential gains from favorable market movements, it generates a premium that offsets the upfront cost of the structure.
The strike rates for both options are normally set within a certain range around the current exchange rate. This provides a 'collar' or limited range within which the effective exchange rate for the client can move up or down.
If the exchange rate stays within this predefined range until the expiration date, the holder's position remains unaffected by currency movements, offering financial stability.
If the exchange rate moves outside the predetermined range, a collar option hedges against adverse fluctuations. However, it also limits potential gains from favorable market movements, as the option's benefits are capped.
Participating forward contracts
Participating forward contracts are similar to forward contracts but with one key distinction: they can allow businesses to benefit from positive currency market movements that may occur between the date of the contract and the expiry date.
Participating forward contracts offer a unique hedging solution by allowing you to lock in a worst-case rate (the 'strike rate'). This means you can protect yourself from adverse currency movements while still benefiting from a portion of favorable fluctuations. The participation rate can be customized to meet your needs (this is usually 50% of the structure, but it can be tailored to your requirements).
Extendable FX options
These types of forex options allow you to extend the period of the contract before the date of expiry is reached.
If you're considering this FX option, there are two main risks. Rates could drop below the prevailing market by the time the contract expires, and profit could be affected by over-hedging.
Benefit from over 20 premium-free FX options
We're proud to offer our clients more than 20 premium-free FX options when choosing to partner with Moneycorp. If you want to find out more about how foreign exchange option contracts can help your business mitigate exchange rate risks, call us at 800 239 2389 (US) or 888 822 8131 (Canada). You can also contact us via email.
Please note that our options products may not be suitable for all prospective clients.
What's the difference between premium-free options and vanilla options?
The primary distinction between vanilla options and premium-free options lies in their upfront cost. Vanilla options require an initial payment, while premium-free FX options, as the name suggests, do not. However, this cost-free benefit is often accompanied by increased complexity.
Premium-free options:
- These options offer an attractive solution for businesses that do not want to pay a premium.
- To offset the cost of purchasing the right to buy foreign currencies at a more favorable rate, it is necessary to sell another currency option at the same time, which creates a potential obligation for the client to deal. The cost of one premium is offset by the other.
Vanilla options:
- To purchase the option to buy or sell a currency pair at a predetermined exchange rate, you must first pay a premium. This premium acts as the cost of acquiring this right, without the obligation to exercise it.
- This premium is non-refundable, regardless of whether you choose to exercise your option at expiration. It's important to note there's a risk of losing the premium if the spot exchange rate becomes more favorable than the strike price at the expiration date.
How do I find the FX option for my business?
The most competitive foreign exchange option for your business will depend on a number of factors. This can include your international dealings, plans for growth, operational expenses, and your overall risk management strategy. Each FX option comes with different levels of potential risk and advantages, so it's important to consider which one would provide the most suitable solution for your business.
Our experts are on hand to provide information to help you find the most suitable forex options for your business. Get in touch today to discuss your options.
What are the alternatives to foreign exchange options?
Forex options may not be the ideal solution for your business. We offer other effective foreign exchange solutions, including forward contracts and market orders, to help you manage currency risk and optimize your international operations. These approaches provide flexibility and efficiency in navigating volatile markets while aligning with your business objectives.
Forward contracts
A forward contract allows you to lock in the prevailing exchange rate for up to two years. It can be an excellent tool to help businesses plan and minimize exposure to currency rate fluctuations. You'll know exactly how much you will pay for international goods and services.
Spot contracts
Secure a favorable exchange rate for your international payments with a spot contract. This allows you to lock in the current exchange rate for up to two days, providing a valuable hedge against sudden market fluctuations and ensuring predictable costs.
Market orders
These are considered a basic FX order. They allow you to open a position at the current price so you can buy foreign currency swiftly. There are a range of other, more advanced FX orders that allow you to buy at your chosen rate.
Why choose Moneycorp for your FX options?
At Moneycorp, we offer a comprehensive suite of forex options and international currency hedging strategies. These are designed to mitigate your risks and maximize trading outcomes.
Below are just some of the reasons why you should consider partnering with Moneycorp for your foreign exchange options:
- A wide range of FX options and products to suit your business needs
- Over 45 years of market experience
- Exchange in more than 120 different currencies
- Dedicated support from specialists in foreign exchange for a tailored service
- Market insights from financial experts in our global offices
We are also fully licensed and regulated by the Securities and Exchange Commission (SEC) and hold a money transmitter license in all 50 US states.
Get in touch with our foreign exchange options experts
Navigating the complexities of international business operations can be challenging as timely foreign exchange transactions are crucial for success. Our forex trade options offer a robust framework for managing your risk and optimizing your business strategy. Get in touch with one of our currency specialists today by calling 800 239 2389 (US) or 888 822 8131 (Canada). Alternatively, you can contact us via email.
*Forward Contracts may or may not require a deposit dependent upon your facility agreement.
**Our team of experienced currency risk management specialists are approved by the FCA for investment business. Following an initial assessment of your risk-appetite and investment objectives they can formulate and illustrate a bespoke solution for you to consider. Please note that Option related products are regulated investment products which can carry a higher level of risk than Forward Contracts.
