A Currency Options (CO) Contract is an agreement that gives investors the right, but not the obligation, to buy or sell a Currency Futures Contract on a future date at a fixed price. COs give investors the right to buy the underlying Currency Future. Put Options give them the right to sell it. Investors are required to pay a premium for choice of exercising the Option or not. The premium is calculated based on the volatility of the underlying exchange rate.
Investors, importers, exporters and travellers can use COs to hedge themselves against movements in the exchange rate. Speculators use COs to make a profit on short-term movements in prices. Arbitrageurs use them to profit from the price differentials of similar products in different markets. Some investors also use COs to enhance the overall performance of a portfolio over the long term.
Register as a client with
an authorised JSE Currency Derivatives member, deposit the required initial margin and sell or buy according to your needs.