nih Mi @ NSE {An investment called India CURRENC¥ yas CURRENCY OPTIONS,Corporates, Treasury and Risk Management units may consider following points before trading in carency options: Celeution of Foreign exchange excorue value and period forwhich ‘option: cover to Bek, WMessureren: of Hedge rio one degree of tk acceptable to valuation and cost aeneft analysis of currency option quotes with spot rate and tures rate PRODUCT SPECIFICATIONS errr ee Ftlones oy eurey—|raninconsacs we Ttuuatteonarey odes raeving Datpseuleen: pear eaenal pro MTE Rasaannteh enteataetnaieterent oe ‘Whe should trade in Options? Investors belonging to the following categories, depending on thei financial goals and investment objectives may conser trading hy options Investors who wan: to pascpate in he forex market without trading crholdng any curency Speculator who nave sting views on the cutrancy market and te Hedgers wine want to protect the value oftheir emitance. currency Option Hedging Strategiex ‘Currency option strategy for import transactions Purchased Cal option: On 1st August 2010, XY? buys 2 USD clloption or covering fs import ransactions, at 2 stke rate of #550, The exary date le 3 months ve 31% October 2010 The premium ls 40 pas onthe fall Gain of bss on expry at various levels of exchange ‘ate i damonstates below vise poy off able ane graph When spot exchange rate res above she str ke price there are guns tothe extent of premism paid . . 8B) Currency option strategy fr Export transactions Purchased Put option: On Ist August 2010 XYZ buys a USD Put option for covering its exper ansactions, af 2 sire rate of 4550, The exaiy dote ig months ie 21st October 2010 The premium ie 30 pas onthe Put. Gain or les on expiry at varous levels of exchange rate i= emonstates below vise payoff sable ane graph When spor exchange rate fll Below the she price, there are gens, shen frses above the sre pice there ate lsses, wich ae maximum tothe extent of premium paid(ther diferent strategies using Options Searah Sen) ouprof wren teybeveh on USD Jenssyyorm — fesonit gees eon & evn sen [roti when:uion | evn on Uso bot teen poteced ast Prof when USNR Prof when SOR sunsssurr maxpronewhens | vesertedbutsr on Pot erence seyurengecec ie baton senor [expr whens bad | ocesel outer on sevice maxprottwhers | Newari eensh on sires rote nen: ore Satu ation rn prt whe rutcaten Prone wnen: ores!