For hedging and diversifying your portfolio, DenizBank AG Priority Banking provides you access to global markets with tailored prices for your derivative and product demands.
For hedging and diversifying your portfolio, DenizBank AG Priority Banking provides you access to global markets with tailored prices for your derivative and product demands.
Derivative products are products of which the return is based on the return performance of an underlying asset (such as security, foreign currency, interest) and which is derived from the return of the underlying asset.
The most important feature in derivative products is that “maturity” concept is included in transactions. In other terms, with derivative transactions, an agreement is made today for a transaction that will be conducted in the future. Derivative products can be used by investors who want to avoid possible market fluctuations in the future and who aim to generate additional return with these fluctuations by taking a certain amount of risk.
Forward, Option, Swap are the main derivative products.
Forward (buy/sell transaction) refers to the agreements related to buying or selling specific amount of foreign currency in a forward maturity from a price that is defined today. In the forward agreements, both parties have the liability to conduct transaction in terms of the price and amount defined in the agreement, irrespective of the spot rate of the asset subject to transaction in the maturity.
Forward transactions are products that can be used for protection against the negative effects of fluctuations in the asset prices and for generating return from these fluctuations.
Options are agreements which give a certain amount of assets, economic or financial indicator, money or capital market instrument, commodity or foreign currency, the right to buy or sell from a certain price, all of which form a base for the option, to option buyer in exchange of Premium but do not oblige the buyer, but oblige the option seller to sell in case the buyer requests as such in certain maturity (Europe type option). With this structure, the options can be compared to an insurance transaction by the party that buys the right by paying premiums.
There are mainly 2 option types;
Call Option: Call option is a type of option agreement which gives the party buying the option agreement the right to buy a certain quantity of the asset, which is written in the agreement, at a certain time or up to a certain time for a defined price.
Put Option: Put option is a type of option agreement which gives the party buying the option agreement the right to sell a certain amount of the asset, which is written in the agreement, at a certain time or up to a certain time for a defined price.
They are agreements of forward transactions which are made for exchanging a currency with another currency and repayment of the exchanged principals at the end of a specific period. In FX swap transactions, the amount exchanged in the beginning of the transaction is repaid on the maturity date which is defined in the agreement in terms of the amount calculated with exchange/parity which is again defined in the agreement. In other words FX swap is formed as a combination of spot FX transaction conducted on the date of agreement and forward transaction in the opposite direction of the initial transaction which was agreed to be conducted on the maturity date. (If the initial transaction is buying spot, a forward sales agreement is made on the maturity date, if the initial transaction is selling spot, a forward purchase agreement is made on the maturity date.)
For further details about Derivative Transactions, please contact our Priority Banking Department via
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