EURUSD Hedge Strategies using Options
Forex HedgingÂ
Published on: 14th December 2020
Forex Hedging Strategies
If you have EUR payables and USD receivables then you are possibly concerned about EUR strength against USD. EUR has already climbed 8.2% since this year against USD.Â
It is important to remain hedged. While forward hedge can lock your rate, options can allow you to benefit when EUR softens against USD. Â
Here, we present some low-cost option structures which can provide you protection and at the same time some benefits if EUR depreciates against USD.Â
Maturity: 3 months
Spot ref: 1.2125
Forward premium: 0.0026 (26 pips)
| Sell No | Instruments | Buy Eur Call Strike | Sell Eur Call Strike | Sell Eur Put Strike | Cost (USD) |
|---|---|---|---|---|---|
| 1 | Plain Eur Call | 1.2125 | 0.0187 | ||
| 2 | Plain Eur Call | 1.2075 | 0.0216 | ||
| 3 | Plain Eur Call | 1.2200 | 0.0151 | ||
| 4 | Plain Eur Call | 1.2300 | 0.0113 | ||
| 5 | Eur Call Spread | 1.2125 | 1.2425 | 0.0113 | |
| 6 | Eur Call Spread | 1.2125 | 1.2325 | 0.0085 | |
| 7 | Eur Call Spread | 1.2200 | 1.2350 | 0.0056 | |
| 8 | Eur Call Spread | 1.2200 | 1.2450 | 0.0082 | |
| 9 | Eur long Seagull | 1.2125 | 1.2425 | 1.2025 | 0.0003 |
| 10 | Eur long Seagull | 1.2200 | 1.2500 | 1.1975 | 0.0000 |
| 11 | Eur long Seagull | 1.2150 | 1.2500 | 1.2040 | 0.0000 |
| 12 | Eur Range Forward | 1.2150 | 1.2025 | 0.0064 | |
| 13 | Eur Range Forward | 1.2250 | 1.2075 | 0.0000 |