IFA Global Weekly Outlook #1

17 August, 2025

Option Structures for Exporters & Importers

In today’s volatile currency markets, option structures remain a smart way for businesses to manage their forex exposures while maintaining flexibility. Unlike plain forwards, structured options allow corporates to hedge at zero cost while optimizing their risk–reward profile. Let’s look at two practical strategies for importers and exporters.

For Importers: Seagull Structure
With the spot at 87.58, an importer can consider a 3-month Seagull option. The strategy involves:

• Buying a call at-the-money-forward (ATMF) at 87.97

• Selling a call at 89.35

• Selling a put at 87.20

This structure comes at zero upfront cost. The payoff ensures that the importer is protected against a sharp depreciation of the rupee while participating in some upside if the currency remains range-bound. The trade-off is capped gains beyond 89.35 and downside exposure below 87.20.

For Exporters: Forward Extra
Exporters, on the other hand, can benefit from a 6-month Forward Extra structure. This involves:

• Buying a put at 88.35

• Selling a call at 88.35 with enhanced kick-in (EKI) at 89.38

• Spot ATMF at 88.43

Again, this is structured at zero cost. The exporter secures protection on the downside at 88.35 while having conditional participation on the upside. The EKI level ensures additional flexibility if the rupee appreciates sharply.

Takeaway
Both structures provide a balance of protection and participation, tailored to specific needs—importers hedging against rupee weakness and exporters guarding against appreciation. In a market where volatility is constant, such zero-cost strategies are effective tools to safeguard margins while remaining competitive.