A currency option is similar to a forward contract in that the buyer of the contract can buy or sell a currency on a future date at a rate which is determined today. But unlike a forward contract, he has no compulsion to deliver currencies under this contract. This gives remarkable flexibility to the client to forego the contract and deal at the current market rate in case the market moves in his favor. If the market moves against him he can demand delivery by the bank.

In other words this is a forward contract that needs to be performed at the option of the buyer. In exchange for this right, the buyer has to pay an upfront premium to the seller of the contract. BBK sells options to its clients in all major currencies. This product is suitable for clients with contingent exposures which may or may not materialize. It is also handy in cases where the maturity date of the exposure is not known, or where the client is not sure about the direction of movement in rates, but wants to play safe.