Forward Plus Options

This structure provides the hedging party with 100% protection against unfavorable currency movements beyond the strike price at all times, as well as the potential to participate in favorable movements, provided the trigger level is not reached in the spot market for the duration of the contract.

A Forward Plus structure involves the purchase of a Call (Put) Option and the sale of a Put (Call) Option at the same amount, maturity date and strike rate with a Kick In trigger event. The sold Put (Call) has no effect on the underlying structure unless the currency depreciates to the trigger level. Once the trigger event occurs, the Option reverts to a Forward Contract. The forward rate is the rate of the strike price of the purchased Call and sold Put.

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