Currency warrant
Fix the exchange rate so it is never worse than what the currency market offers. You don't pay a deposit and you don't need to settle.
Currency warrant
Why use currency hedging with CYRRUS?
Predetermined conditions
Negative market developments won't catch you off guard
No need to create an account
The best exchange rates
We have a CNB licence
How does a currency warrant work?
- It's a financial instrument whose underlying asset is a currency pair. The minimum hedged amount is EUR or USD 100,000.
- In the event of a negative market development, you will receive compensation in the form of a coupon (finances).
- You don't have to settle on the settlement day. Settlement is performed based on a CFD (contract for difference).
- You don't pay a deposit, and you won't be forced to exchange at a worse fixed rate than you can currently get on the market on settlement day.
Warrant closing and settlement
First you pay a warrant premium,
which is the only cost for fixing the exchange rate.
You choose the fixing date, i.e. strike day.
The fixed exchange rate will be determined on this day.
We wait for the chosen day to settle the trade.
Now you decide if you want to settle the warrant.
The price on the spot market is better than your fixed rate.
In this case, you don't settle the warrant and you buy at a better price on the spot market.
The price on the spot market is worse than your fixed rate.
In this case, we will compensate you for the difference with coupons; this is money in the currency in which you paid the warrant premium.
Example of currency warrant (model situation)
The client has to pay for the order of a large assembly in five years, and since he signed the contract today, he knows that he will pay EUR 1,000,000 in five years.
But because he produces and delivers in the Czech Republic, his revenue is in CZK.
The client expresses an interest in fixing the exchange rate and requests approximate pricing of an FX warrant in the amount of EUR 1,000,000 for a period of five years.
CYRRUS informs the client of the percentage of the warrant premium, which is the client's cost of fixation.
The client sends the warrant premium to CYRRUS.
The client chooses the 'strike day', on which the fixed exchange rate will be determined. The exchange rate is defined by the mid-market rate at the moment of fixation. No margin is added to the rate.
We tell the client the fixed value is 24.30 on the same day.
The FX warrant in the form of securities will be sent to the client's asset account managed by CYRRUS.
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