Client: Antiques Dealer based in Georgia
- Currency Exposure: €55K
- Product(s): Market Orders, Window Forward
- Hedge Ratio: 100%
The Story
An antiques dealer based in Georgia has followed news surrounding an upcoming referendum election in Britain. The client understood that the British pound (GBP) was poised to be strongly impacted by the results of the election. Our personal specialists helped the President tailor a strategy that helped take advantage of a positive rate move, and protect from a negative rate move.
Our personal specialists proactively monitored the situation and kept the client up to date with market moves and Monex’ own forecasts.
The Challenge
The client estimated their currency exposure for the year. The client believed the rate would move in their favor and wanted to capitalize on a positive market move, but did not want to tie up the company’s cash flow in purchasing the funds in full.
The Strategy
In order to protect from wild market volatility a strategy was drawn up by their Monex specialist, which involved using a combination of:
- 55K GBP (100%) take-profit and stop-loss market order
- 55K GBP (100%) window forward opening after the market order hits and closing 12 months out
With the guidance of their Monex specialist, they evaluated the company’s risk tolerance and decided to place take-profit and stop-loss market orders. The take-profit order ensured that if the rate moved in the client’s favor the pre-specified rate would be automatically locked in. The stop-loss order ensured that if the rate moved against the client’s favor the pre-specified rate would be automatically secured at an acceptable loss to the company.
To avoid tying up the company’s cash flow once the market order hit, the order would be rolled into a window forward. This would allow the client to draw-down the funds at the amount and time needed throughout the year.
The Outcome
The combined strategy enabled the client to take advantage of their ideal rate, saving $— than if they purchased the currency prior to the election.
