A hedging tool (specifically, a variant on contingent payout option) that protects a basket of assets from unfavorable, downside currency fluctuations by keeping currency losses above a prespecified threshold only when the overall return concurrently falls below a pre-determined hurdle point. However, a contingent currency option is not a cure-all hedging strategy because the impact of unfavorable upside currency changeability on underlying assets would not be neutralized using this option.
December 16, 2024
