Mastering Derivatives Markets, 4th Edition

9

Currency Derivatives

‘...the products used to risk manage a position are the very same products that can be used to speculate.’

Introduction

Over the counter currency options

Currency options: reduced premium strategies

Simple exotic structures

Currency swaps

Exchange-traded instruments

Quiz

INTRODUCTION

There is a range of currency derivatives covering both short- and long-term exposures; in this context a short-term exposure may be only a few days. A long-term exposure may be linked to a foreign currency bond that could have a 10- or 20-year term. It almost goes without saying that the products used to risk manage a position are the same products that can be used to speculate. Most trading or speculative positions, as opposed to hedging ...