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Tactical forwards - import
Australian Importers - Example: Participating Forward (Importer)
| Current Market Parameters | Proposed Participating Forward | ||
| Spot: | .5175 | Contract Rate (guaranteed rate): | .5135 |
| Swap: | -.0016 | ||
| Term: | 3 months | Trigger Rate: | .5300 |
| Outright: | .5159 | ||
The possible outcomes at the expiration of the contract are:
- Trigger at .5300 untouched during the term of the contract:
Sell AUD at either the prevailing Spot Rate or the Contract Rate, depending on which is more favourable. - Trigger at .5300 touched during the life of the contract:
Sell AUD at the Contract Rate.
The Participating Forward has provided guaranteed cover, while at the same time giving you the opportunity to benefit from an appreciating AUD up to and including .5299.
Example: Reward Forward (Importer)
| Current Market Parameters | Proposed Reward Forward | ||
| Spot: | .5175 | Contract Rate (guaranteed rate): | .5135 |
| Swap: | -.0016 | ||
| Term: | 3 months | Trigger Rate: | .4900 |
| Outright: | .5159 | ||
The possible outcomes at the expiration of the contract are:
- Trigger at .4900 touched during the term of the contract:
Sell AUD at either the prevailing Spot Rate or the Contract Rate, depending on which is more favourable. - Trigger at .4900 untouched during the life of the contract:
Sell AUD at the Contract Rate.
The Reward Forward has provided guaranteed cover. And if the Trigger Rate of .4900 has traded during the life of the contract, you have the opportunity to benefit from an appreciating AUD.
Example: Cylinder Forward (Importer)
| Current Market Parameters | Proposed Cylinder Forward | ||
| Spot: | .5175 | Floor Rate (worst case): | .5030 |
| Swap: | -.0016 | ||
| Term: | 3 months | Ceiling Rate (best case): | .5240 |
| Outright: | .5159 | ||
The possible outcomes at the expiration of the contract are:
- AUD/USD trading above .5240
Sell AUD at the Ceiling Rate of .5240 - AUD/USD trading below .5030
Sell AUD at the Floor Rate of .5030 - AUD/USD trading between .5240 and .5030
Sell AUD at the prevailing Spot Rate
The Cylinder Forward has provided guaranteed cover, while at the same time giving you the opportunity to benefit from the AUD appreciating up to .5240.
Example: Reset Forward (Importer)
| Current Market Parameters | Proposed Reset Forward | ||
| Spot: | .5175 | Original Contract Rate: | .5120 |
| Swap: | -.0016 | ||
| Term: | 3 months | Reset Contract Rate: | .5160 |
| Outright: | .5159 | Trigger Rate: | .5375 |
The possible outcomes at the expiration of the contract are:
- Trigger at .5375 untouched during the term of the contract:
Sell AUD at either the prevailing Spot Rate or the Original Contract Rate, depending on which is more favourable. - Trigger at .5375 touched during the life of the contract:
Sell AUD at the Reset Contract Rate.
The Reset Forward has provided guaranteed cover, while at the same time giving you the opportunity to benefit from an appreciating AUD up to and including .5374.
Need more information?
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