I wish to lock in a portion of my savings (6 figures) given the strong value of the Aussie Dollar (AUD); regardless of whether it continues to rise or fall. If i merely buy USD i face a 6.5% decline in the money due to (foregone interest difference 6.5% from ubank and 0% for USD) each year.
1) I think a forward purchase contract is a possible choice but the big banks don't give great rates though XE.com or OzForex are possible but is limited to 12 months in advance no longer.
2) Futures contract is possible but it may involve unlimited downside and my goal is to hedge not speculate. I am ignorant of futures (and options).
3) Option contract: But i was thinking i would like to be able to purchase the underlying asset ie USD. Although maybe it is not necessary to have the choice to buy the underlying asset because if i make a gain (AUD falls) then the value of the option would rise and i can use those profits to purchase the additional USD that my fewer AUD savings (in USD) can now buy. Are there other drawbacks to this approach? I think the cost is high if i trade locally (ASX) compared to overseas eg optionsxpress.
Any thoughts or ideas appreciated.
I apologise if this is too far off topic! Feel free to suggest a website i should look at.
regards
1) I think a forward purchase contract is a possible choice but the big banks don't give great rates though XE.com or OzForex are possible but is limited to 12 months in advance no longer.
2) Futures contract is possible but it may involve unlimited downside and my goal is to hedge not speculate. I am ignorant of futures (and options).
3) Option contract: But i was thinking i would like to be able to purchase the underlying asset ie USD. Although maybe it is not necessary to have the choice to buy the underlying asset because if i make a gain (AUD falls) then the value of the option would rise and i can use those profits to purchase the additional USD that my fewer AUD savings (in USD) can now buy. Are there other drawbacks to this approach? I think the cost is high if i trade locally (ASX) compared to overseas eg optionsxpress.
Any thoughts or ideas appreciated.
I apologise if this is too far off topic! Feel free to suggest a website i should look at.
regards