Currency exchange in 12 months

Investing / Funding & Currency conversions
1

Hi all,

I am a bit new into everything so apologies if this question is actually not a good one…

I want to exchange in 12 months time a 6 digit amount from CHF to EUR. I do reckon that the exchange rate is currently actually good, however, i want to investigate if i should invest in a currency option to speculate if the CHF/EUR exchange rate would change even more to my advantage.

Anyone to share experiences/ view on this and also potential broker to use?

Thanks!

2

It will probably go down or up. However it might also go sideways

6 Likes
3

Nobody knows if today’s rate is “good” or if the EUR/CHF is 1:1 tomorrow or 1.25 in a month.

I don’,t see the point of any option. If you think the rate is good, just buy the € right now. If you think the rate gets better wait or (if you like risk) borrow € somehow and get CHF.

4

This is the point. I do think it gets better and want to bet on it but want to hedge / limit the risk if it does not get better

5

Then why not buy every month or every 3 monts a shovel of the € you’ll need?

6

I’m no expert here but I think you can’t have it both ways. You can’t eat the cake and have the cake.

7

Correct - what I am wondering is how much premium i would need to pay to bet on this change in the exchange rate. Cause this would be all i would lose if i do not execute the option

8

You want to look up EUR/CHF forward rates for that e.g. https://www.investing.com/currencies/eur-chf-forward-rates - EURCHF 1Y FWD -46.3700 -43.2600. These are basis points and for institutional investors, so about 0.4-0.5% cost per year plus your bank’s markup.

9

Why do you need to bet with options on that?

Currency is probably one of the easiest things to trade. If you believe that the EUR will get stronger just sell your CHF for EUR.

10

Unless you don’t have the cash yet.

11

Buy some call option?