Dynamic forward
The best of all worlds
DYNAMIC FORWARD™ is an advanced risk management solution, based on plain-vanilla instruments combined with advanced economic models and academic research, that provides superior protection results with substantially lower collateral demands.
YOUR CHALLENGE
Fluctuation in currency exchange rates, commodity pricing, interest rates and stock values is unavoidable.
This is why your global business is constantly exposed to the risk of uncertainty, especially when long-term planning is involved.
Over time, and with transactions in the tens and hundreds of millions of dollars, these fluctuations can have a drastic effect both on your profitability and your ability to manage cash flows and balances.
YOUR CURRENTLY
AVAILBLE OPTIONS
Today, you are probably utilizing one of the three most common hedging strategies available today, each with its own benefits, but also with noticeable disadvantages
Do Nothing
Often, you might opt to do nothing
On the upside - Doing Nothing is the simplest solution, and on the very long term you are probably fine
However, it is also the riskiest alternative, and exposes your business to high volatility in short-medium terms due to the uncertainty of market fluctuations
And puts you in a severe insolvency hazard
Simply put, doing nothing to hedge against market fluctuations means
you are implementing a "hope and pray" strategy
Put/Call Insurance Options
Put/call insurance options are binding contracts that specify the price at which
a currency, commodity, or interest rate can be bought or sold at a future date in exchange for a relatively high premium
Put/Call options are good short term solutions for standalone positions
But they are costly over time
Resulting in long-term losses
And create ISDA exposure
Effectively, put/call options are a decent solution if you make infrequent
short-term transactions, but become very costly over the long run, and result in frequent losses
Future Contracts
Forwards are binding contracts for the purchase or sale of a currency, commodity, stock option or interest on a future date
Forwards are great
short term coverage
Easy to execute
With no up-front fees
But no potential for
future upside profit
And accumulate
long-term indirect costs
But mainly
You are 'locked in' with a set exchange rate
and no ability to compete
If the exchange rate appreciates
there is an immediate margin call
and you may encounter cash flow problems
If the exchange rate depreciates you've only
delayed the problem and you may encounter cash flow problem and face a bigger challenge when you
renew
VITAL OP'S DYNAMIC FORWARD™
Vital OP has developed a sophisticated and "smart" approach to hedging against fluctuation risk that allows
you to avoid heavy up-front fees while maintaining flexibility, and based on "plain-vanilla" instruments.
DYNAMIC FORWARD™ constantly monitors and tracks the market, and adjusts over time, repositioning according to ongoing
challenges thus allowing the client to fit the hedge to its needs rather than to the needs of the hedging instrument.
DYNAMIC FORWARD™ provides
Working capital liquidity
Cash flow flexibility
allowing competition
Long term protection
Substantially lower
collateral demands
Dynamic Forward vs. Current Available Alternatives
Profit / loss due to change in exchange rate
