Commodity Option
Secure a right for better prices
- you will get an access to main European and US commodity markets
- reduce your costs /increase profits according to market developments
- without fees for execution or settlement
Commodity Option Advantages
- financial tool, with which you can secure against fluctuations of commodity prices
- by purchasing a commodity option you obtain the right (not an obligation) to settlement between a market price and an agreed fixed commodity price
- you get the right to the payment of the difference in prices, if the market commodity price develops in your favour
- contrary to the commodity swap, you are not obliged to pay the difference, if the price develops against you
- this right has its cost – the premium
- you pay the premium after the acquisition of the option
- the amount of premium depends on the agreed price, its comparison with the current price, time period and assumed price movement
- we distinguish between two basic types of commodity options:
- Cap (Call) – is used to secure against price increase
- Floor (Put) – is used to secure against commodity price decrease
- by a combination of both you can create Collar (a zero-cost structure) – insure against extreme fluctuations in commodity prices
- the product is designed for clients, whose subject of business is directly related to fluctuations in commodity prices
- you may conclude a contract only in major global currencies
- a minimum trade volume is €25,000
In order to get the product you need to sign a contractual documentation.