Option contracts for international money transfers

What is an option contract?

Option contracts give a buyer or seller the right (but not the obligation) to execute an exchange of a particular currency at a predetermined rate at or by a future date. 

Option contracts cost money whether they are executed or not, but they can provide additional benefits compared to limit and stop-loss orders and forwards contracts. Let’s find out how it would work with the case study below.

Case Study: Selling a film prop to an overseas client

Film Prop.jpg

Business issue: If a company plans to make or receive a foreign currency payment in the future, but is not certain the payment will happen or how large it will be.

Business goal: Using an option contract to protect against a currency decline

An Australian special effects company, OZeffects (OZE), agreed to build a new film prop in three months’ time for €500,000 for a movie being shot in France. 

Worried about possible exchange rate moves against the Australian dollar (AUS), OZE decided to enter into a currency option called a ‘protection option’ and paid a small premium. This allowed OZE to set a worst-case rate to protect the company from the rate declining, but also allowed OZE to benefit if the rate improved. OZE was able to fix a worst-case AUS to EUR rate of 0.6901. 

Without the protection of an ‘option’, if the rate had moved to 0.6766, OZE would have received A$6,750 less for their prop. However, on the settlement date, the rate had moved to 0.6886, increasing OZE’s sale amount by a further A$6,000.

Where can I find out more about option contracts?

To find a provider who offers option contracts, you can conduct a comparison search on our site or head to our reviews section, where we’ve looked more closely at several companies who offer services for managing currency risk.

Money Transfer Comparison

Results are ranked in order of the best overall deal, taking into account transfer times, rates, fees, and customer service.

Money Transfer Reviews

Use our Currency Tools

Currency Volatility Tool - assess the impact of currency risk

Currency Analysis Tool - conduct an audit of historical transactions

Email us:


Call us:

+44 207 871 5565 (UK)
Mon-Fri 10am-6pm (UTC)

+1 212 600 8553 (US)
Mon-Fri 10am-6pm (EDT)

FXcompared.com is an fx money comparison site for international money transfer and to compare rates from currency brokers for sending money abroad. The website and the information provided is for informational purposes only and does not constitute an offer, solicitation or advice on any financial service or transaction. None of the information presented is intended to form the basis for any investment decision, and no specific recommendations are intended.  FXC Group Ltd and FX Compared Ltd does not provide any guarantees of any data from third parties listed on this website. FX compared Ltd expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from (i) any error, omission or inaccuracy in any such information or (ii) any action resulting therefrom.