About Collar Option (CLO)
A Collar Option (CLO) is a foreign exchange hedging product designed to help customers manage risks associated with fluctuations of exchange rates. Collar Options consists of a combination of two Plain Vanilla FX Option transactions executed simultaneously, namely a buy Call Option and sell Put Option, or a sell Call Option and buy Put Option, with different strike prices. Through this structure, customers can obtain protection against exchange rate movements by establishing a predetermined exchange rate range agreed upon at the inception of the transaction.
Benefits of Collar Option
- Provides a longer hedging tenor.
- The option premium for a CLO is lower than that of a single outright Call Option.
- Customers are protected against exchange rate increases or decreases beyond a predetermined range (Strike 1 and Strike 2).
- Customers are protected from significant losses due to currency fluctuations, although potential gains are capped.
- Enables customers to minimize or eliminate option premium costs by giving up part of the upside potential of their position (allowing for a zero-cost premium structure).
Features of Collar Option
- Lower and Upper Strike Prices
- Transaction Nominal Amount
- Collateral Amount
- Option Type
- Tenor
- Option Exercise Date
- Source and Timing of Reference Price
- Settlement Date
- Option Premium
- Premium Payment Date
Terms and Conditions
- This product is available to corporate customers (non-individual customers) who maintain a Maybank Current Account or Maybank Savings Account (in IDR or Foreign Currency) and have signed the required documentation for CLO transactions, including:
- Prospectus/Term Sheet
- Cooling-off Period acknowledgment as stipulated in the signed Term Sheet
- Suitability and Appropriateness Memorandum
- Personal RIPLAY (Product and Service Information Summary)
- Product Highlight
- Applicable to corporate customers and customers classified as professional /businesses with a minimum capital of IDR 20 billion or its equivalent in foreign currency and that have conducted business operations for at least 36 consecutive months.
- Customers must have an approved Treasury Line, Foreign Exchange Line, Derivative Line facility with the Bank, or have entered into an Indonesian Derivatives Master Agreement (Perjanjian Induk Derivatif Indonesia – PIDI), subject to case-by-case assessment.
- Customers shall authorize the Bank to debit the account designated for the CLO transactions.
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